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Ways And Means

Volume 129: debated on Tuesday 15 March 1988

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Budget Statement

Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor's speech, as in past years, copies of the Budget resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.

3.31 pm

I am reliably informed that my Budget speech last year was the shortest this century. My Budget speech this year is likely to have a different claim to a place in the history books — not, the House will be glad to learn, as the longest Budget speech this century, but as the last untelevised Budget speech.

As I once again present the first Budget of a new Parliament, the British economy is stronger than at any time since the war. As the British people recognised last June, this has not happened by chance. It has happened because, for almost nine years now, we have followed the right policies and stuck to them. I reaffirm those policies today. In particular, there will be no letting up in our determination to defeat inflation.

I shall begin, as usual, with the economic background to the Budget. I shall then deal with monetary policy, and with the public finances this year and next, and indeed for the remainder of this Parliament. Finally, I shall propose a number of measures designed to improve the performance of the economy still further, by changing the structure of taxation. For this will be a tax reform Budget.

As usual, the Financial Statement and Budget Report, together with a number of press releases filling out the details of my tax proposals, will be available from the Vote Office as soon as I have sat down.

The Economic Background

I start with the economic background.

The strength and durability of the economic upswing has now exceeded all post-war records. We are about to enter our eighth successive year of sustained growth, and the sixth in which this has been combined with low inflation. And, even without looking to 1988, the six years to 1987 have been the longest period of steady growth, at a rate averaging 3 per cent. a year, for half a century.

This performance compares favourably not only with our own past, but also with the economic performance of other countries. During the 1960s and the 1970s, Britain's growth rate was the lowest of all the major European economies. During the 1980s, our growth rate has been the highest of all the major European economies.

In 1987 as a whole, output grew by getting on for 4½ per cent., rather more than the rate of inflation which averaged 4·2 per cent. At the same time, unemployment fell faster than in any other year since the war, in every region of the country, and more than in any other major nation.

The plain fact is that the British economy has been transformed. Prudent financial policies have given business and industry the confidence to expand, while supply side reforms have progressively removed the barriers to enterprise.

Nowhere has this transformation been more marked than in manufacturing, where output rose last year by 54½ per cent. This outstanding performance was founded on a further big improvement in productivity. In the 1980s, output per head in manufacturing has gone up faster in Britain than in any other major industrial country, and we led the way once again last year. This is in stark contrast to the 1960s and 1970s, when in the growth of manufacturing productivity, as in so much else, we were bottom of the league.

The current account of the balance of payments is now estimated to have been in deficit last year by a little over £1½ billion, after seven successive years of surplus. This is well below the deficit I forecast at the time of last year's Budget, despite growth turning out stronger than forecast. The reason for the smaller deficit was the better than expected performance of visible trade, with exports of manufactures up by 84½ per cent. This continues the consistent trend of the 1980s, with British manufacturers maintaining their share of an expanding world trade—the crucial test of competitiveness—after decades during which Britain's share was steadily declining.

Looking ahead, I expect 1988 to be yet another year of healthy growth with low inflation; and there is every prospect that unemployment will continue to fall, although probably not as rapidly as last year.

The pace of non-oil growth is likely to ease from now on, returning to the underlying trend of the past few years. Output for 1988 as a whole is forecast to be 3 per cent. higher than in 1987, with the non-oil economy up by 3½ per cent. Business investment is forecast to grow particularly strongly, with a rise of 9 per cent.

As last year, inflation is forecast to end the year at 4 per cent. While this is still too high, it is a testimony to the soundness of our policies that the present strong and sustained upswing, unlike almost all its predecessors, has not led to any resurgence of inflation.

With growth in the United Kingdom economy likely to continue to outpace that of most other major countries, particularly in continental Europe, and with our oil surplus falling as North sea oil production declines, the current account of the balance of payments is forecast to remain in deficit this year, by some £4 billion, equivalent to less than 1 per cent. of GDP. Given the strength of the economy in general, and of our public finances in particular, not to mention our massive net overseas assets, I foresee no difficulty in financing a temporary current account deficit of this scale.

But the outlook both for exports and for jobs will depend critically on employers keeping their costs firmly under control. Unit labour costs in manufacturing scarcely rose at all in 1987. It is vital that employers do not let this slip, and keep a tight grip on all their costs, not least pay.

In my Budget speech last year, I warned that:

"Given the continuation of present policies in this country, the biggest risk to the excellent prospect I have outlined is that of a downturn in the world economy as a whole."—[Official Report, 17 March 1987; Vol. 112, c. 817.]

That remains the case. The dramatic collapse in the world's equity markets last October was not the second coming of 1929 or the harbinger of a 1930s-style world slump, as so many feared at the time—although it could have been a great deal nastier had the authorities in the major nations not responded in a prompt and appropriate way. It was essentially an overdue market correction which did little more than reverse the rapid rise in share prices

of the previous year. Certainly, business confidence does not seem to have been greatly affected, and growth in the seven major industrial countries as a whole this year is likely to be only slightly lower than last year.

But Black Monday was also a warning. The world's three largest economies—the United States, Japan and Germany — have made a number of the policy adjustments necessary to reduce the imbalances which have for so long afflicted them, and there is evidence that the measures they have taken are starting to bear fruit. But there is still a long way to go; and meanwhile there is the constant danger that the process of adjustment, and with it the world economy as a whole, could be gravely damaged either by further wild gyrations in the dollar exchange rate or by a lurch into protectionism.

Success in reducing these imbalances depends on countries putting the right fiscal and monetary policies in place, and keeping them there. But the necessary adjustments are much more likely to be achieved if the objective of greater exchange rate stability is given an explicit role in the process of international co-operation, as has been the case for well over two years now. I can assure the House that we shall continue to play our full part.

Monetary Policy

Meanwhile, the maintenance of sound money and prudent public finances will keep us in the best possible position to weather any storms we may face, either at home or abroad.

The medium-term financial strategy, now entering its ninth year, will continue to provide the framework for reducing the growth of money GDP, and hence inflation, over the medium term. These will be achieved by maintaining firm monetary discipline, buttressed by a prudent fiscal stance.

Achieving the gradual eradication of inflation requires a steady reduction in monetary growth in the medium term. While I shall continue to take account of broad money, or liquidity, as last year there will be no explicit target. For narrow money, M0, the target range for 1988–89 will be 1 to 5 per cent., as foreshadowed in last year's MTFS.

Short-term interest rates remain the essential instrument of monetary policy. Within a continuous and comprehensive assessment of monetary conditions, I will continue to set interest rates at the level necessary to ensure downward pressure on inflation.

Exchange rates play a central role in domestic monetary decisions as well as in international policy co-operation. I believe that most business men have welcomed the greater exchange rate stability over the past year. It is important that they also accept the financial discipline inherent in this policy.

Public Sector Finances

As I pointed out a moment ago, a sound monetary policy needs to be buttressed by a prudent fiscal stance.

At one time, it was regarded as the hallmark of good government to maintain a balanced budget; to ensure that, in time of peace, Government spending was fully financed by revenues from taxation, with no need for Government borrowing. Over the years, this simple and beneficent rule was increasingly disregarded, culminating in the catastrophe of 1975–76, when the last Labour Government

had a budget deficit, or public sector borrowing requirement, equivalent in today's terms to some £40 billion.

This profligacy not only brought economic disaster arid the national humiliation of a bail-out by the IMF; it also added massively to the burden of debt interest, not merely now but for a generation to come.

Thus, one of our main objectives, when we first took office in 1979, was to bring down Government borrowing. We steadily reduced the public sector borrowing requirement from the 5¼ per cent. of GDP we inherited to only three quarters of I per cent. in 1986–87. Today, I am able to tell the House that in 1987–88, the year now ending, we are set to secure something previously achieved only on one isolated occasion since the beginning of the 1950s: a balanced budget.

Indeed, we have gone even further. It looks as if the final outturn for 1987–88 will be a budget surplus of £3 billion. Instead of a PSBR, a PSDR: not a public sector borrowing requirement, but a public sector debt repayment. And, incidentally, even if there had been no privatisation proceeds at all, the resulting PSBR, at a half of 1 per cent. of GDP, would still have been the lowest in all but one year since the beginning of the 1950s.

Some two thirds of this substantial undershoot of the PSBR I set at the time of last year's Budget is the result of the increased tax revenues that have flowed from a buoyant economy; while the remaining third is due to lower than expected public expenditure, again the outcome of a buoyant economy: less in benefits for the unemployed, higher receipts from council house sales, and improved trading performance by the nationalised industries.

A balanced budget is a valuable discipline for the medium term. It represents security for the present and an investment for the future. Having achieved it, I intend to stick to it. In other words, henceforth a zero PSBR will be the norm. This provides a clear and simple rule, with a good historical pedigree.

In the very nature of things, there are bound to be fluctuations on either side from year to year. It is in this context that I have to set the precise fiscal stance for the year ahead, 1988–89.

I have already announced, in the Autumn Statement last November, a £2½ billion increase in public expenditure plans for 1988–89, with resources allocated to programmes up by over £4½ billion. This means that, over the coming year, we will be spending at least £1,100 million more on health than in the year now ending, at least £900 million more on education, and at least £500 million more on law and order.

These large increases in public expenditure programmes for the coming year will be financed partly from the saving in debt interest resulting from the reduction in Government borrowing. Debt interest payments now account for about three quarters of a percentage point less of GDP than they did only three years ago. This may riot sound very much, but it implies a saving of some £3 billion a year. And the balanced budget path I have set out in this year's MTFS will help to reduce debt interest payments still further.

We have thus secured an enviable virtuous circle in public finance: lower borrowing and lower tax rates create both the scope and the incentive for the private sector to expand. And the private sector then generates higher revenues which permit further reductions in borrowing or tax.

But even so, the increased public spending now planned for 1988–89 inevitably implies less scope for reducing taxation. Moreover, I have decided that for the year immediately ahead the path of prudence and caution is to budget for a further surplus of the same size as this year's expected outturn—that is to say, a further public sector debt repayment of some £3 billion.

What this means is that it will not be possible in this Budget to reduce the burden of taxation; that is to say, to reduce taxation as a share of GDP. However, the House may be pleased to know that, with a strong and healthy economy, a constant burden of taxation implies a reduction in tax rates.

Tax Reform

I indicated at the outset that this will be a radical, tax-reforming Budget.

Over the past few years there has been increasing recognition, throughout the industrialised world, of the importance of tax reform in improving economic performance. And for us in this country the lesson is underlined by the success of the reform of business taxation which I announced in my first Budget, at the start of the last Parliament.

But while tax reform is a simple matter for the armchair critic, it is very much more difficult in practice. It is difficult technically and difficult politically—since any tax system, however it arose, creates powerful vested interests in favour of the status quo.

Nor, indeed, is it right that change should be too violent. People have a right to expect a reasonable degree of stability in the framework within which they order their affairs. But change there has to be.

So the tax-reforming Chancellor must tread a careful path. That I have sought to do in this Budget. The proposals I shall he making today amount to a substantial and coherent package which will be of increasing benefit to the taxpayer and to the economy as a whole in the years to come.

I have been guided by four basic principles—first, the need to reduce tax rates where they are clearly too high; second, the need to reduce or abolish unwarranted tax breaks; third, the need to make life a little simpler for the taxpayer; and, fourth, the need to remove some manifest injustices from the system.

Independent Taxation And Tax Penalties On Marriage

My first reform concerns the taxation of marriage.

The present system for the taxation of married couples goes back 180 years. It taxes the income of a married woman as if it belonged to her husband. Quite simply, that is no longer acceptable.

This is a matter on which there has already been extensive consultation. The time has come to take action.

I therefore propose a major reform of personal taxation, with two objectives: first, to give married women the same privacy and independence in their tax affairs as everyone else; and, second, to bring to an end the ways in which the tax system can penalise marriage.

I have decided to introduce, at the earliest practicable date, April 1990, a completely new system of independent taxation. Under this new system, a husband and wife will

be taxed independently, on income of all kinds. All taxpayers, male or female, married or single, will be entitled to the same personal allowance, which will be available against all income, whether from earnings, pensions or savings.

In addition, there will be a married couple's allowance, equal to the difference under the present system between the married man's allowance and the single allowance. This new allowance will go in the first instance to the husband, so that his tax threshold will not fall. But if he does not have enough income to use it in full, he will be able to transfer any unused portion to his wife, to set against her income.

This ensures that the tax system will continue to recognise marriage, as it should do. At the same time, from 1990 married women will pay their own tax, on the basis of their own income, and have their own tax return, when one is necessary. There will, of course, be nothing to stop married women from asking their husbands to handle their tax affairs, or vice versa, as before; and many will no doubt do so. But what matters is that, for the first time ever, married women will have the right to complete independence and privacy so far as tax is concerned.

In the same way, a husband and wife will be taxed independently on any capital gains they may have, with an annual exemption each, instead of one between them as now. But transfers of capital between husband and wife will continue to be entirely free of any liability to tax.

As I have said, the new system will come into force in 1990. This is much sooner than would have been possible for most of the alternatives that have been canvassed. The necessary legislation will be contained in this year's Finance Bill. The cost of this historic reform, which for the first time ever gives a fair deal to married women, will be a little over £½ billion in 1990–91.

I mentioned a few moments ago the tax penalties on marriage. It is clearly wrong that some couples should find themselves paying more tax simply because they are married. I propose to put that right.

Independent taxation by itself will remove the most common penalty—the taxation of a married woman's income at her husband's marginal rate. But there are other tax penalties on marriage, and I propose to abolish them. These changes need not await the introduction of independent taxation.

Under the present system an unmarried couple can get twice as much mortgage interest relief as a married couple. This has attracted increasing—and justified—criticism. I propose to put a stop to it as from August this year. Thereafter, the £30,000 limit on mortgage interest relief will be related to the house or flat, irrespective of the number of borrowers. This was the solution put forward in the 1986 Green Paper on personal taxation, and it was widely welcomed. Existing mortgages will be unaffected.

Another anomaly is that an unmarried couple with children can each claim the additional personal allowance intended for single parents, and thus get more tax relief than a married couple in the same position. I propose to confine them to a single additional personal allowance, with effect from April 1989.

Thus this Budget will not only, for the first time ever, give married women a fair deal from the tax system. It will also eliminate, for all practical purposes, the other tax penalties which, under the present system, can arise on marriage.

Business Taxation

I turn now to business taxation. The major reform of business taxation, which I introduced in 1984 and which was completed in 1986, has given us one of the lowest corporation tax rates in the world. This has encouraged overseas companies to invest in Britain and, most important of all, has greatly improved the quality of investment by British firms. It is a crucial part of an environment in which company profitability has recovered to its highest level for some 20 years. It has succeeded in its objectives.

I do not, therefore, propose any further changes to the structure of corporation tax. And the main corporation tax rate for 1988–89 will be unchanged at 35 per cent. But I do have some changes to propose to specific aspects of business taxation.

British exporters have done extremely well in recent years, thanks to major improvements in efficiency and quality. But no exporter could honestly claim that his success hinges on the fact that the cost of entertaining overseas customers is tax deductible, whereas business entertainment generally is not. I therefore propose to simplify the system by making all business entertainment non-deductible for tax purposes, including for VAT.

In conjunction with my right hon. Friend the Secretary of State for Energy, I propose to restructure the tax regime for the new generation of southern basin and onshore fields so as to relate tax liability more closely to profitability. Accordingly, my right hon. Friend will shortly be bringing forward legislation to abolish royalties, from 1 July, for all such fields. At the same time, I propose to reduce the petroleum revenue tax oil allowance for these fields. This will mean the end of royalties for all future fields.

The Building Societies Act 1986 gives building societies the power to convert themselves into companies, if they so wish. At present, however, they would face a heavy, and unintended, tax charge if they did so. I propose to rectify this.

I have two changes to propose to the tax arrangements for Lloyd's. The first meets the only point that Lloyd's have raised on last year's legislation on reinsurance to close. The second will benefit both Lloyd's and the Inland Revenue by simplifying the administrative arrangements for taxing Lloyd's members.

I also propose to simplify the section 482 rules for companies that wish to migrate overseas, so as to bring these rules broadly into line with those of most of our major competitors. In future, companies will be resident in the United Kingdom if they are incorporated here. Subject to that, instead of having to ask for Treasury consent, companies will be free to migrate, provided only that they pay their tax first.

I now turn to a number of proposals to give further help to small businesses and new businesses, whose encouragement is a central theme of Government policy. Since 1979, the rate of new business formation, net of failures, has averaged 500 a week. This shows beyond any doubt the continuing vigour of this sector, which is such an important source of enterprise, of innovation, and of new jobs.

Many new businesses have been greatly assisted by the business expansion scheme, which has now been running for nearly five years. During that time, it has enabled new and expanding companies to raise equity finance

amounting to some £150 million a year. However, the rapid growth of the venture capital market since 1983 has meant that companies seeking relatively large amounts of equity investment can now raise these readily, while smaller companies looking for more modest amounts can still find it difficult to do so.

To improve the targeting of the BES, I therefore propose to introduce a limit of half a million pounds on the amount that any company can raise under the scheme in any one year. Investment should thus be better directed at the smaller and newer businesses, particularly those outside the south-east of England, which can still find it hard to raise equity finance in other ways. In the special circumstances of the ship chartering industry, however, the limit will be £5 million.

I have one further proposal affecting the business expansion scheme.

One of the key reasons for our economic transformation has been the reform of the supply side of the economy.

The tax relief that I introduced last year for profit-related pay will, in time, help to increase pay flexibility and to improve the working of the labour market. But if successful firms are to expand further, and create still more jobs, we also have to make it easier for people to move to where the new jobs are.

For years, the shortage of private rented accommodation has been an obstacle to labour mobility. The Government's proposals to deregulate new rents are already going through the House. Deregulation will, over time, substantially increase the supply of housing for rent. But this will not happen overnight, and there is a case for a special incentive to speed up the process in the early years.

I therefore propose to extend the business expansion scheme to include companies specialising in the letting of residential property on the new assured tenancy basis.

The BES is well suited to this task. Since full tax relief is given immediately, it should bring forward new investment straight away. And we will be building on success.

The limit for this type of investment will be £5 million a year for any one company. Since the relief is specifically designed to provide an extra stimulus in the early years of deregulation, it will run only for investments made before the end of 1993.

This change will powerfully reinforce the impact of decontrol in reviving the private rented sector of housing in Britain.

In last year's Budget I raised the ceiling for capital gains tax retirement relief from £100,000 of gain to £125,000. But I believe it is necessary to do more to help the small business man whose wealth is tied up in his business, and who is faced with the disincentive of a heavy capital gains tax bill when he sells up on retirement. I therefore propose to extend capital gains tax retirement relief so that, on top of the total exemption, half of any gain between £125,000 and £500,000 will also be completely free of tax.

While on the subject of capital gains tax, I propose to extend rollover relief to a group of assets whose common characteristic is that they barely existed when the present list of qualifying assets was drawn up. They are milk quotas, potato quotas, satellites and spacecraft. I know that this will be warmly welcomed in the farming and extra-terrestrial communities alike.

Lastly, on the small business front, I propose to increase the VAT threshold to £22,100, the maximum permitted under existing European Community law.

Throughout my time as Chancellor, I have been on the look-out for taxes to abolish. Abolition is clearly the simplest variety of reform. I have already abolished the national insurance surcharge, the investment income surcharge, development land tax and the tax on lifetime gifts.

At present, companies have to pay a capital duty of 1 per cent. whenever they raise new capital — whenever, for example, a new company is formed, or an existing company sells new shares to the public. This is undesirable on two counts. It is a burden on companies which need to secure external finance for expansion; and it discriminates against equity capital as compared with debt finance and bank borrowing.

Capital duty is a relatively recent impost which had to be introduced in 1973 in compliance with our obligations under European Community law. But the relevant Community directive has now been amended. Accordingly, I propose to abolish capital duty with effect from midnight tonight.

At the same time, I propose to get rid of the unit trust instrument duty, a similar though much less substantial tax, which is levied at the rate of ¼per cent. on all assets put into a unit trust. I know that the unit trust movement will welcome this minor relief, and I trust that the benefit will be fully passed on to investors.

The cost of abolishing these two taxes will be of the order of £100 million in 1988–89. Not counting minor imposts, the demise of capital duty brings the number of taxes that I have abolished up to five: an average of one a Budget.

Covenants And Maintenance

I now turn to an important area of personal taxation which is ripe for reform and simplification: the taxation of payments made under deeds of covenant and maintenance arrangements.

Covenants to charity will be wholly unaffected by the changes I am about to propose.

Other covenants, and maintenance arrangements, are essentially ways of transferring income from one individual to another, usually from one member of a family to another, whether it is a parent or grandparent covenanting to a child, or a husband paying maintenance to an ex-wife.

Most of the financial transfers that take place within families are rightly and properly outside the scope of the tax system altogether. I propose, as far as is practicable, to take covenants and maintenance out as well. This will greatly simplify an unnecessarily complex part of the tax system.

First, covenants. Charitable covenants apart, I propose to take all new covenants made by individuals on or after today out of the tax system altogether. In other words, people receiving payments under covenants will not be liable to tax on them, and those making the payments will not be able to claim tax relief on them. The tax treatment of existing covenants will continue unchanged.

The largest single group of people affected by this change will be students, together with their parents, many

of whom nowadays choose to make their contribution to the student maintenance grant by covenant. This has arisen as an unintended by-product of the reduction in 1970 of the legal age of majority from 21 to 18.

As I have already indicated, those who have already made such covenants will continue to benefit from tax relief. But for new students the parental contribution to the maintenance grant will be assessed on a new and more generous scale, to reflect the withdrawal of tax relief on new covenants. My right hon. Friends the Secretaries of State for Education and Science and for Scotland will be publishing the details tomorrow.

One desirable side effect of this reform is that future students will no longer be deterred from taking vacation jobs because their covenant income has already absorbed their personal allowance.

Student covenants apart, there will be no compensation for the loss of tax advantage arising from these proposals. But once rates of income tax are set at reasonable levels, this is precisely the sort of tax shelter it is right to dispense with.

Next, maintenance. Here, too, we tax the recipient, only to give tax relief to the payer. The present rules can be complex and confusing for people going through separation and divorce. The tax system ought to intrude as little as possible, though it is reasonable that there should be some recognition of the fact that an ex-husband is continuing to support his ex-wife, or indeed vice versa.

Accordingly, I propose that, for new maintenance arrangements, recipients will not be liable to any tax whatever on maintenance payments. Relief to the payer will be restricted to payments to a separated or divorced spouse, up to a limit equal to the difference between the married and single allowances.

For existing maintenance arrangements, the present rules will continue to apply in 1988–89, except that a separated or divorced spouse will be exempt from tax on receipts up to the difference between the married and single allowances. Full relief will continue for all those who are making payments under existing court orders or agreements. The same protection will also apply to those who have already applied for court orders, provided that they are made by 30 June. From April 1989 there will be special transitional rules to continue protection for existing arrangements.

While the transitional provisions are inevitably somewhat complex, the new system will be very much simpler than the old, for all concerned. It will reduce the tax relief that can be obtained by the better-off payers of large amounts of maintenance, but for most couples the ex-husband will continue to enjoy full tax relief while the ex-wife will not be taxed.

The reform of the tax treatment of maintenance that I am proposing today will also remove one of the lesser known tax penalties on marriage. At present, an unmarried couple can make large payments either between themselves or to their young children, and get tax relief that would not have been available had they been married. My proposed reform will put an end to that.

As I have said, this reform and simplification of the taxation of covenants and maintenance in no way affects covenants to charity. Indeed, I have a proposal to help charities further.

The payroll giving scheme has now been running for nearly a year. I am glad that so many employers have already set up schemes, and I hope as many employees as

possible will take advantage of them. In order to give further encouragement to charitable giving, and to assist the growth of the payroll giving scheme, I propose to double the annual limit on tax-allowable donations under the scheme to £240, or £20 a month.

Taxes On Spending

I now turn to the taxation of spending.

I have one change to propose today affecting the coverage of value added tax, which will remain at 15 per cent. Confectionery was brought in to VAT by the right hon. Member for Leeds, East (Mr. Healey) in 1974, and the legal definition of confectionery goes back further still to the days of purchase tax. The emergence of new products has rendered this definition, rather like the right hon. Gentleman himself, somewhat obsolete. In particular, recent legal decisions mean that some cereal bars are subject to VAT, while others are not. I propose to clarify the law so that all cereal bars are taxed.

I propose to raise the excise duties as a whole broadly in line with inflation, but to make some modest adjustments within the total. The duty on cigarettes and hand-rolling tobacco will be increased, by the equivalent, including VAT, of between threepence and fourpence for a packet of 20 cigarettes. This will take effect from midnight on Thursday. The duty on a packet of five small cigars will rise by twopence, but that on pipe tobacco will remain unchanged.

As to the alcohol duties, I propose increases which, including VAT, will put about a penny on the price of a pint of average-strength beer and cider, fourpence on a bottle of table wine, and sixpence on a bottle of sparkling or fortified wine. There will once again be no increase in the duty on spirits. These changes will take effect from 6 o'clock tonight.

The existing duty structure is inhibiting sales of drinks known as coolers, which are mixtures of an alcoholic drink and a soft drink. I propose to introduce new lower rates of duty for these products, so as to encourage the young, in particular, to change to drinks with a lower alcohol content. For the same reason, I propose from 1 October to abolish the minimum duty charge on beer, which will encourage the promotion of lower-strength beers.

I propose once again to leave the main rates of vehicle excise duty unchanged. To recover the revenue forgone, I propose increases in petrol and derv duty over and above the rate of inflation, which, including VAT, will raise the price of petrol by between fivepence and sixpence a gallon, and that of derv by a little under fivepence a gallon. These changes will take effect from 6 o'clock tonight.

In my Budget last year, I sought to promote the use of lead-free petrol, with all the environmental benefits it brings, by introducing a duty differential in its favour. As a result, the number of garages selling lead-free petrol has more than trebled. But consumption remains disappointingly low.

Accordingly, I propose to double the duty differential in its favour by exempting unleaded petrol altogether from the duty increase I have just announced for leaded petrol. This means that, despite the higher production costs, the pump price of unleaded petrol should in future be below that of ordinary two-star petrol. I very much hope the petrol companies will now reinforce this concession by vigorously promoting the use of lead-free petrol.

Taxes On Capital

I now turn to taxes on capital.

The emergence of the capital-owning democracy has been one of the most remarkable features of the 1980s. Encouraged by Government policy, more than 2½ million families have bought their homes, bringing the total to nearly two households in three. And our proposals for personal pensions, which come into effect in July, will give a new dimension to pension ownership.

But the most dramatic change has been in share ownership. In last year's Budget I announced the results of a joint Treasury/Stock Exchange survey of the number of shareholders in this country. This revealed that some 8½ million people—one adult in five—owned shares, about three times the number in 1979.

A similar survey has been carried out this year. Despite all the stories of people taking quick profits on privatisation shares, and despite the stock market collapse, the results show that the number of individual shareholders has risen further over the past 12 months, to very nearly 9 million. This illustrates in a quite remarkable fashion how wider share ownership is now taking root.

I have two proposals to encourage share ownership still further to announce today.

First, personal equity plans are off to a successful start. Over a quarter of a million people took out PEPs in 1987 and subscribed nearly £½billion between them. To give further encouragement to this form of investment, I propose to increase the annual limit from £2,400 to £3,000. The new higher limit will apply to all plans taken out this year.

Second, measures to encourage employee share ownership have featured in seven out of the last eight Budgets. As a result, the number of approved all-employee share schemes has risen from 30 in 1979 to over 1,400 today, involving well over 10,000 companies, and providing shares and options for well over 1½ million employees.

Following extensive consultation, including the publication of draft clauses, I now propose to relax the provisions of section 79 of the Finance Act 1972. This will make it easier for companies to provide shares to their employees outside the approved schemes without giving rise to an undue charge to tax. This will he of particular benefit to subsidiary companies and their employees.

In previous Budgets I have already substantially reformed the taxation of capital, with the replacement of capital transfer tax by inheritance tax. But I believe this process can and should be taken further. Last year I reduced the number of inheritance tax rates from seven to four. This year I propose to simplify the tax still further by levying it at a flat rate of 40 per cent.

At the same time, I propose to raise the threshold from £90,000 to £110,000. The increase in the threshold will reduce the number of estates liable to tax by a quarter, allowing many more people to inherit the family home free of tax. And the flat rate of 40 per cent. means that for the family business enjoying 50 per cent. business relief the effective rate of tax can never exceed 20 per cent.—one of the lowest inheritance tax rates in the industrialised world.

The cost of these changes will be £100 million in 1988–89.

Lastly, capital gains tax. Strictly speaking, this should not be a tax on the original capital at all. Nor is it, so far

as gains which have arisen since 1982 are concerned, thanks to the indexation provisions introduced by my predecessor in 1982 and extended in my 1985 Budget. But for gains that arose before 1982 the tax falls largely on purely paper profits resulting from the rampant inflation of the 1970s. In other words, it bites deeply, and capriciously, into the capital itself.

This has long been recognised as manifestly unjust. Indeed, from the time I first entered the House I have argued that capital gains tax should fall only on real gains and not on paper gains. I have therefore looked hard to see if the indexation provisions could be applied right back to the inception of the tax in 1965. Unfortunately, they cannot. The necessary information is in many cases no longer available.

Accordingly, I have decided to bring the base date for the tax forward from 1965 to 1982. That is to say, for all disposals on or after 6 April, that part of any capital gain which arose before April 1982 will be exempt from tax altogether for individuals and companies alike.

This Budget thus ends once and for all the injustice of taxing purely inflationary gains. This will benefit the economy by unlocking assets which have been virtually sterilised because of the penal tax that would have arisen on any sale. And it will help many small business men and farmers in particular.

At present, the first £6,600 a year of capital gain is tax free. The relatively high level of this threshold stems from the substantial increase my predecessor made in 1982 explicitly as rough and ready partial compensation for the continued taxation of pre-1982 paper gains. Now that I have taken pre-1982 gains out of tax altogether, I propose to reduce the capital gains tax threshold to £5,000. It should also be borne in mind that, with the introduction of independent taxation in 1990, a husband and wife will each have their own threshold for capital gains tax as well as for income tax.

Rebasing the tax so as to produce a fully indexed system makes it possible to bring the taxation of gains closer to that of income. In principle, there is little economic difference between income and capital gains, and many people effectively have the option of choosing to a significant extent which to receive. And in so far as there is a difference, it is by no means clear why one should be taxed more heavily than the other. Taxing them at different rates distorts investment decisions and inevitably creates a major tax avoidance industry.

Moreover, at present, with capital gains taxed at 30 per cent. for everybody, higher rate taxpayers face a lower—sometimes much lower—rate of tax on gains than on investment income, while basic rate taxpayers face a higher rate of tax on gains than on income. This contrast is hard to justify.

I therefore propose a fundamental reform. Subject to the new base date, capital gains will continue to be worked out as now, with the present exemptions and reliefs. But the indexed gain will be taxed at the income tax rate that would apply if it were the taxpayer's marginal slice of income. In other words, I propose in future to apply the same rate of tax to income and capital gains alike.

These changes will not take effect until 6 April.

Taxing capital gains at income tax rates makes for greater neutrality in the tax system. It is what we now do

for companies. And it is also the practice in the United States, with the big difference that there they have neither indexation relief nor a separate capital gains tax threshold.

The changes I have announced represent a thoroughgoing reform of capital gains tax which will benefit the economy and eradicate a major injustice. They will sharply reduce the damaging effects of the tax, while ensuring that capital gains remain properly taxed and the yield of income tax adequately protected. They are expected to cost a little over £200 million in 1989–90.

Income Tax

I now turn to income tax.

The way to a strong economy is to boost incentives and enterprise. And that means, among other things, keeping income tax as low as possible.

Income tax has now been reduced in each of the last six Budgets—the first time this has ever occurred. And the strength of the economy over that period speaks for itself.

However, reforming income tax is not simply a matter of cutting the rates. I also have to look at all the various allowances and reliefs to ensure that they are still justified. With this in mind, I have a number of proposals to announce.

First, forestry. I accept that the tax system should recognise the special characteristics of forestry, where there can be anything up to 100 years between the costs of planting and the income from selling the felled timber.

But the present system cannot be justified. It enables top rate taxpayers in particular to shelter other income from tax, by setting it against expenditure on forestry, while the proceeds from any eventual sale are almost tax free.

The time has come to bring it to an end. I propose to do so by the simple expedient of taking commercial woodlands out of the income tax system altogether. That is to say, as from today, and subject to transitional provisions, expenditure on commercial woodlands will no longer be allowed as a deduction for income tax and corporation tax. But, equally, receipts from the sale of trees or felled timber will no longer be liable to tax.

It is, perhaps, a measure of the absurdity of the present system that the total exemption of commercial woodlands from tax will, in time, actually increase tax revenues by over £10 million a year.

At the same time, in order to further the Government's objectives for the rural areas, I have agreed with my right hon. Friends who have responsibilities for forestry and for the environment that, in parallel, there should be increases in planting grants. Full details of the new grant scheme will be announced next week.

The net effect of these changes will be to end an unacceptable form of tax shelter; to simplify the tax system, abolishing the archaic schedule B in its entirety; and to enable the Government to secure its forestry objectives with proper regard for the environment, including a better balance between broad-leaved trees and conifers.

One of the legacies of the years of penal top tax rates is the complicated special relief for large redundancy payments. This is no longer justified. I propose to increase the exemption limit for these payments from £25,000 to £30,000, and to abolish the additional relief for larger amounts.

Next, benefits in kind—perhaps better known as perks. One of the biggest tax-induced distortions in the economy today is the growing tendency to provide remuneration in kind rather than in cash. It must be right to move towards a system of lower taxes all round and fewer tax breaks of this kind.

Far and away the most widespread benefit in kind is the company car, which is substantially undertaxed. Independent studies, based on figures supplied by the AA, suggest that an employee with a typical company car may be taxed on only about a quarter of its true value.

This discrepancy is too great to be allowed to continue. On the other hand, the scale of the undertaxation is so great that it cannot be put right in a single year. But in a Budget when I am able to reduce tax rates, there is a strong case for a substantial increase in the taxation of these benefits. I therefore propose to double the car scales for 1988–89. This increase replaces the 10 per cent. increase which I had already announced for 1988–89. The yield will be £260 million in 1988–89.

The scales for the taxation of car fuel adequately reflect the value of the benefit, and I propose to leave them unchanged for 1988–89.

However, the taxation of the benefit of free car parking threatens to become an administrative nightmare. I therefore propose to exempt this particular benefit from tax altogether.

Next, mortgage interest relief.

This Government are committed to the further spread of home ownership. Mortgage interest relief has an important role to play in achieving that aim.

However, in addition to the decision to apply the £30,000 limit to the house or flat, which I have already announced, and which will remove the most widely-resented tax penalty on marriage, I have a further reform to propose in this area.

This concerns the parallel tax relief for home improvement loans. Most of these loans are for fittings such as double glazing, and have played a significant part in the recent growth of consumer credit without in any way contributing to the expansion of home ownership. This may be partly due to the substantial scope for abuse, as loans ostensibly taken out for home improvements are used for other purposes, a matter which was the subject of a recent report from the Public Accounts Committee.

I propose, therefore, to end tax relief for all new home improvement loans taken out after 5 April. Existing home improvement loans will be unaffected. This is expected to yield £80 million in 1988–89.

Finally, I can turn to income tax itself. The statutory indexation formula means that I should increase all the principal income tax allowances and bands by the increase in the RPI over the year to last December, or 3·7 per cent. rounded up. I propose to do more than that—indeed twice as much.

Thus the single allowance will go up not by £90, as required by indexation, but by £180, to £2,605; and the married allowance will go up not by £150 but by £300, to £4,095. The additional personal allowance and the widow's bereavement allowance will accordingly rise by £120 to £1,490. Similarly, the single age allowance will rise by £220 to £3,180 and the married age allowance by £360 to £5,035. The higher allowances for taxpayers aged 80 and over, which I introduced in the last Budget, will correspondingly be increased by £240 and £360 to £3,310

and £5,205 respectively, and the new age allowance income limit will be £10,600. The upper limit of taxable income for the basic rate band will be increased to £19,300.

The increases I have just announced mean that the basic tax thresholds will be fully 25 per cent. higher, in real terms, than they were in 1978–79, Labour's last year. Indeed, the married man's tax threshold will he at its highest level in real terms for nearly half a century.

Given these substantial increases in the main allowances, I am taking the opportunity to simplify the system by abolishing three minor personal allowances which have been unchanged, in cash terms, for over 20 years: the housekeeper allowance, the dependent relative allowance, and the son's or daughter's services allowance.

In our general election manifesto last year, we committed ourselves to reducing the basic rate of income tax to 25 pence in the pound as soon as it was prudent to do so. This pledge followed a reduction of twopence in the pound to 27 pence in last year's Budget.

At the time, this was regarded with some scepticism, not to say cynicism, by the Opposition, who no doubt recalled that Labour Governments used to reduce tax only in front of an election, and at all other times increased it. Indeed, shortly before last year's Budget, the right hon. Gentleman the Deputy Leader of the Labour party, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), said:

"I must advise the Chancellor of something that he already knows: whichever party wins the general election, the tax cuts that he makes in this Budget will be reversed."—[Official Report, 20 January 1987; Vol. 108, c. 772.]

The time has come to put the right hon. Gentleman out of his misery. So far from reversing the 1987 Budget tax reductions, I propose to take this, the first opportunity since the general election, to fulfil our manifesto pledge. The basic rate of income tax for 1988–89 will be 25 pence in the pound.

The small companies' rate of corporation tax will similarily be reduced to 25 per cent. This means that the basic rate of income tax and the corporation tax rate for small companies will both be at their lowest level since the war.

This is an obscenity. The Chancellor cannot do this. [Interruption]

Order. I name Mr. Alex Salmond.

Motion made, and Question put,

That Mr. Alex Salmond be suspended from the service of the House.—[Mr. Wakeham.]

The House proceeded to a Division

On a point of order, Mr. Deputy Speaker. May I draw your attention to Standing Order No. 39, which gives the Chair the power to decide, in determining a Division, whether to ask hon. Members to rise in their places if they want a Division, and to do likewise if they do not? I think it is manifest this afternoon that this is a ridiculous spoiling tactic. I ask you to consider implementing this Standing Order in future, rather than allowing important proceedings of the House to be interrupted in order to gain notoriety for idiots.

I take account of what the hon. Member for Staffordshire, South (Mr. Cormack) says. I think that in the circumstances the House has proceeded correctly.

The House having divided: Ayes 354, Noes 19.

Division No. 215]

[4.43 pm

AYES

Adams, Allen (Paisley N)Clarke, Rt Hon K. (Rushcliffe)
Adley, RobertColvin, Michael
Aitken, JonathanCoombs, Anthony (Wyre F'rest)
Alexander, RichardCoombs, Simon (Swindon)
Alison, Rt Hon MichaelCormack, Patrick
Allen, GrahamCouchman, James
Amess, DavidCran, James
Amos, AlanCunningham, Dr John
Anderson, DonaldCurrie, Mrs Edwina
Arbuthnot, JamesDavies, Q. (Stamf'd & Spald'g)
Arnold, Jacques (Gravesham)Davis, David (Boothferry)
Arnold, Tom (Hazel Grove)Day, Stephen
Ashby, DavidDevlin, Tim
Ashdown, PaddyDewar, Donald
Aspinwall, JackDickens, Geoffrey
Atkins, RobertDobson, Frank
Baker, Rt Hon K. (Mole Valley)Doran, Frank
Baker, Nicholas (Dorset N)Dorrell, Stephen
Baldry, TonyDouglas-Hamilton, Lord James
Banks, Robert (Harrogate)Dover, Den
Barnes, Mrs Rosie (Greenwich)Dunn, Bob
Barron, KevinDurant, Tony
Batiste, SpencerDykes, Hugh
Beaumont-Dark, AnthonyEggar, Tim
Beggs, RoyEmery, Sir Peter
Beith, A. J.Evans, David (Welwyn Hatf'd)
Bell, StuartEvans, John (St Helens N)
Bellingham, HenryEvennett, David
Bendall, VivianFairbairn, Nicholas
Bennett, Nicholas (Pembroke)Fallon, Michael
Biffen, Rt Hon JohnFarr, Sir John
Biggs-Davison, Sir JohnFaulds, Andrew
Blackburn, Dr John G.Favell, Tony
Blair, TonyFearn, Ronald
Blaker, Rt Hon Sir PeterFenner, Dame Peggy
Bottomley, PeterField, Barry (Isle of Wight)
Bottomley, Mrs VirginiaField, Frank (Birkenhead)
Bowden, Gerald (Dulwich)Finsberg, Sir Geoffrey
Bowis, JohnForman, Nigel
Boyes, RolandForsyth, Michael (Stirling)
Braine, Rt Hon Sir BernardForsythe, Clifford (Antrim S)
Brandon-Bravo, MartinForth, Eric
Bray, Dr JeremyFoster, Derek
Brazier, JulianFoulkes, George
Bright, GrahamFowler, Rt Hon Norman
Brittan, Rt Hon LeonFox, Sir Marcus
Brooke, Rt Hon PeterFranks, Cecil
Brown, Gordon (D'mline E)Freeman, Roger
Brown, Michael (Brigg & Cl't's)French, Douglas
Brown, Nicholas (Newcastle E)Galbraith, Sam
Browne, John (Winchester)Gardiner, George
Bruce, Ian (Dorset South)Gill, Christopher
Buck, Sir AntonyGilmour, Rt Hon Sir Ian
Budgen, NicholasGlyn, Dr Alan
Burns, SimonGoodlad, Alastair
Burt, AlistairGoodson-Wickes, Dr Charles
Butcher, JohnGow, Ian
Butler, ChrisGower, Sir Raymond
Butterfill, JohnGrant, Sir Anthony (CambsSW)
Campbell, Menzies (Fife NE)Greenway, Harry (Ealing N)
Carlile, Alex (Mont'g)Griffiths, Peter (Portsmouth N)
Carlisle, Kenneth (Lincoln)Grist, Ian
Carrington, MatthewGround, Patrick
Cash, WilliamGrylls, Michael
Channon, Rt Hon PaulGummer, Rt Hon John Selwyn
Chapman, SydneyHamilton, Hon Archie (Epsom)
Chope, ChristopherHanley, Jeremy
Clark, Hon Alan (Plym'th S'n)Hannam, John
Clark, Dr David (S Shields)Hargreaves, A. (B'ham H'll Gr')
Clark, Dr Michael (Rochford)Hargreaves, Ken (Hyndburn)
Clark, Sir W. (Croydon S)Harris, David

Haselhurst, AlanMans, Keith
Hattersley, Rt Hon RoyMaples, John
Hawkins, ChristopherMarland, Paul
Hayes, JerryMarlow, Tony
Hayward, RobertMarshall, John (Hendon S)
Heath, Rt Hon EdwardMartin, David (Portsmouth S)
Heathcoat-Amory, DavidMaude, Hon Francis
Heddle, JohnMawhinney, Dr Brian
Henderson, DougMaxwell-Hyslop, Robin
Heseltine, Rt Hon MichaelMeacher, Michael
Hicks, Mrs Maureen (Wolv' NE)Meyer, Sir Anthony
Hicks, Robert (Cornwall SE)Miller, Hal
Higgins, Rt Hon Terence L.Mitchell, Andrew (Gedling)
Hill, JamesMitchell, David (Hants NW)
Hind, KennethMoate, Roger
Holland, StuartMonro, Sir Hector
Holt, RichardMontgomery, Sir Fergus
Hordern, Sir PeterMoonie, Dr Lewis
Howard, MichaelMorris, Rt Hon J. (Aberavon)
Howarth, Alan (Strat'd-on-A)Morrison, Hon Sir Charles
Howarth, George (Knowsley N)Moss, Malcolm
Howe, Rt Hon Sir GeoffreyMowlam, Marjorie
Howell, Rt Hon David (G'dford)Neale, Gerrard
Howell, Rt Hon D. (S'heath)Nelson, Anthony
Howell, Ralph (North Norfolk)Neubert, Michael
Howells, GeraintNewton, Rt Hon Tony
Hughes, Robert (Aberdeen N)Nicholls, Patrick
Hughes, Robert G. (Harrow W)Nicholson, David (Taunton)
Hunt, David (Wirral W)Nicholson, Emma (Devon West)
Hunt, John (Ravensbourne)O'Neill, Martin
Hunter, AndrewOnslow, Rt Hon Cranley
Ingram, AdamOppenheim, Phillip
Irvine, MichaelOwen, Rt Hon Dr David
Irving, CharlesPage, Richard
Jack, MichaelPaice, James
Jackson, RobertParkinson, Rt Hon Cecil
Janman, TimPatnick, Irvine
Jessel, TobyPatten, John (Oxford W)
John, BrynmorPawsey, James
Johnson Smith, Sir GeoffreyPeacock, Mrs Elizabeth
Jones, Robert B (Herts W)Porter, Barry (Wirral S)
Jopling, Rt Hon MichaelPorter, David (Waveney)
Kellett-Bowman, Dame ElainePortillo, Michael
Kennedy, CharlesPowell, William (Corby)
Key, RobertPrice, Sir David
Kilfedder, JamesRadice, Giles
King, Roger (B'ham N'thfield)Raffan, Keith
Kinnock, Rt Hon NeilRaison, Rt Hon Timothy
Kirkwood, ArchyRandall, Stuart
Knapman, RogerRathbone, Tim
Knight, Greg (Derby North)Redwood, John
Knowles, MichaelReid, Dr John
Knox, DavidRhodes James, Robert
Lamont, Rt Hon NormanRhys Williams, Sir Brandon
Lang, IanRiddick, Graham
Latham, MichaelRidley, Rt Hon Nicholas
Lawrence, IvanRidsdale, Sir Julian
Lawson, Rt Hon NigelRifkind, Rt Hon Malcolm
Lee, John (Pendle)Roberts, Allan (Bootle)
Leigh, Edward (Gainsbor'gh)Roberts, Wyn (Conwy)
Lennox-Boyd, Hon MarkRobertson, George
Lightbown, DavidRoe, Mrs Marion
Lilley, PeterRooker, Jeff
Livsey, RichardRossi, Sir Hugh
Lloyd, Sir Ian (Havant)Rowe, Andrew
Lloyd, Peter (Fareham)Rumbold, Mrs Angela
Lord, MichaelRyder, Richard
Luce, Rt Hon RichardSackville, Hon Tom
Lyell, Sir NicholasSainsbury, Hon Tim
Macdonald, Calum A.Shaw, David (Dover)
Macfarlane, Sir NeilShaw, Sir Giles (Pudsey)
McKay, Allen (Barnsley West)Shaw, Sir Michael (Scarb')
MacKay, Andrew (E Berkshire)Sheldon, Rt Hon Robert
Maclean, DavidShephard, Mrs G. (Norfolk SW)
Maclennan, RobertShepherd, Colin (Hereford)
McLoughlin, PatrickShersby, Michael
McNair-Wilson, M. (Newbury)Sims, Roger
Madel, DavidSkeet, Sir Trevor
Major, Rt Hon JohnSmith, Andrew (Oxford E)
Malins, HumfreySmith, Rt Hon J. (Monk'ds E)

Smith, Tim (Beaconsfield)Thurnham, Peter
Soames, Hon NicholasTownend, John (Bridlington)
Speller, TonyTredinnick, David
Spicer, Sir Jim (Dorset W)Trippier, David
Spicer, Michael (S Worcs)Viggers, Peter
Squire, RobinWaddington, Rt Hon David
Stanbrook, IvorWakeham, Rt Hon John
Steel, Rt Hon DavidWaldegrave, Hon William
Steen, AnthonyWalden, George
Stern, MichaelWalker, Bill (T'side North)
Stevens, LewisWallace, James
Stewart, Andy (Sherwood)Waller, Gary
Stewart, Ian (Hertfordshire N)Ward, John
Stokes, JohnWardle, Charles (Bexhill)
Straw, JackWatts, John
Sumberg, DavidWells, Bowen
Summerson, HugoWhitney, Ray
Tapsell, Sir PeterWiddecombe, Ann
Taylor, Mrs Ann (Dewsbury)Wilkinson, John
Taylor, Ian (Esher)Wilshire, David
Taylor, John M (Solihull)Winterton, Nicholas
Taylor, Teddy (S'end E)Wood, Timothy
Temple-Morris, PeterYeo, Tim
Thatcher, Rt Hon MargaretYoung, Sir George (Acton)
Thompson, D. (Calder Valley)
Thompson, Patrick (Norwich N)Tellers for the Ayes:
Thorne, NeilMr. Robert Boscawen and
Thornton, MalcolmMr. Tristan Garel-Jones.

NOES

Abbott, Ms DianeMahon, Mrs Alice
Canavan, DennisNellist, Dave
Clay, BobPrimarolo, Dawn
Corbyn, JeremySalmond, Alex
Cryer, BobSedgemore, Brian
Ewing, Mrs Margaret (Moray)Skinner, Dennis
Grant, Bernie (Tottenham)Thomas, Dr Dafydd Elis
Heffer, Eric S.
Jones, leuan (Ynys Môn)Tellers for the Noes:
Lambie, DavidMr. Andrew Welsh and
McGrady, EddieMr. Dafydd Wigley.
Madden, Max

Question accordingly agreed to.

Ordered,

That Mr. Alex Salmond be suspended from the service of the House.

then directed that the hon. Member withdraw from the House and he withdrew accordingly.

On a point of order, Mr. Deputy Speaker. Is it in order to point out that the cretinous performance that we have just witnessed owed everything to self-publicity and nothing to social concern, as testified by the attendance record of members of the Scottish National party in the Social Security Bill Committee—

To repeat, Mr. Deputy Speaker, the basic rate of income tax for 1988–89 will be 25 pence in the pound.

The small companies' rate of corporation tax will similarly be reduced to 25 per cent. This means that the basic rate of income tax and the corporation tax rate for small companies will both be at their lowest level since the war.

Life assurance premium relief remains in place for policies taken out before the 1984 Budget. It has traditionally been given at half the basic rate of income tax. I therefore propose to reduce it from 15 per cent. to 121 per cent. But, to give life offices time to adjust, this change will not take effect until 6 April 1989.

I also propose to reduce the additional rate which applies to the income of discretionary trusts and for certain other purposes from 18 per cent. to 10 per cent.

It is now nine years since my predecessor, in his first Budget in 1979, reduced the top rate of income lax from the absurd 83 per cent. that prevailed under Labour to 60 per cent. where it has remained ever since. At that time, this was broadly in line with the European average for the top rate of tax. It is now one of the highest. And not only do the majority of European countries now have a top rate of tax below 60 per cent. but in the English-speaking countries outside Europe—not only the United States and Canada, but in Labour Australia and New Zealand, too—the top rate is now below 50 per cent., sometimes well below.

The reason for the worldwide trend towards lower top rates of tax is clear. Excessive rates of income tax destroy enterprise, encourage avoidance, and drive talent to more hospitable shores overseas. As a result, so far from raising additional revenue, over time they actually raise less.

By contrast, a reduction in the top rates of income tax can over time result in a higher, not a lower, yield to the Exchequer. Despite the substantial reduction in the top rate of tax in 1979, and the subsequent abolition of the investment income surcharge in 1984, the top 5 per cent. of taxpayers today contribute a third as much again in real terms as they did in 1978–79, Labour's last year; while the remaining 95 per cent. of taxpayers pay about the same in real terms as they did in 1978–79.

After nine years at 60 per cent., I believe the time has come to make a further reduction in the top rate of income tax. At present there are no fewer than five higher rates of income tax; 40 per cent., 45 per cent., 50 per cent., 55 per cent. and 60 per cent. I propose to abolish all the higher rates of tax above 40 per cent.

This major reform will leave us with one of the simplest systems of income tax in the world, consisting—

Order. The hon. Gentleman knows that, if he persists, I shall have no option but to use the disciplinary power.

Order. There will be plenty of time and opportunity to debate these matters in the days ahead.

Order.

Grave disorder having arisen in the House, MR. DEPUTY SPEAKER, pursuant to Standing Order No. 45 (Power of Mr. Speaker to adjourn House or suspend sitting), suspended the sitting for 10 minutes.

Sitting suspended at 5.1 pm.

5.11 pm

This major reform will leave us with one of the simplest systems of income tax in the world, consisting of a basic rate of 25 per cent. and a single higher rate of 40 per cent. And, indeed, a system of personal taxation in which there is no rate anywhere in excess of 40 per cent.

I believe that 40 per cent. is an acceptable top rate of tax. But, bearing in mind that the basic rate of income tax is also the starting rate, 25 per cent. is still too high.

Since we first took office in 1979, we have reduced the basic rate of income tax from 33 per cent.—one third—to 25 per cent. —a quarter. Our aim should now be to get it down to a fifth—a rate of 20 pence in the pound —as soon as we prudently and sensibly can.

Meanwhile, I have today been able to reduce income tax at all levels, with increases in both the personal allowances and the basic rate limit, and reductions in both the basic and higher rates. The tax reduction for a married man on average earnings will be worth nearly £5 a week. The changes will take effect under PAYE on the first pay day after 14 June. They will cost £4¼ billion in 1988–89 over and above statutory indexation, of which three quarters represents the cost of increasing tax thresholds and reducing the basic rate.

The total cost of all the measures in this year's budget, again on an indexed basis, is a shade under £4 billion.

Peroration

Mr. Deputy Speaker, in this Budget, I have reaffirmed the prudent polices which have brought us unprecedented economic strength. I have announced a radical reform of the taxation of marriage, which for the first time ever will give married women a fair deal from the tax system. I have eliminated the long-standing injustice of taxing inflationary gains, and abolished a fifth tax. I have radically reformed the structure of personal taxation, so that there is no rate anywhere in the system in excess of 40 per cent.

After an Autumn Statement which substantially increased public spending in priority areas, I have once again cut the basic rate of income tax, fulfilling our manifesto pledge of a basic rate of 25 pence in the pound and setting a new target of 20 pence in the pound.

And I have balanced the Budget.

I commend this Budget to the House.

Provisional Collection Of Taxes

Motion made, and Question put, pursuant to Standing Order No. 50 (Ways and Means motions),

That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
  • (a) Beer (motion No. 2)
  • (b) Wine and made-wine (motion No. 3)
  • (c) Cider (motion No. 4)
  • (d) Tobacco Products (motion No. 5)
  • (e) Hydrocarbon oil (motion No. 6)
  • (f) Vehicles excise duty (motion No. 7)
  • (g) Vehicles excise duty (exceptional loads, etc) (motion No. 8).—[Mr. Lawson.]
  • The House divided: Ayes 287, Noes 4.

    Division No. 216]

    [5.15 pm

    AYES

    Adley, RobertAlison, Rt Hon Michael
    Aitken, JonathanAmess, David
    Alexander, RichardAmos, Alan

    Arbuthnot, JamesFranks, Cecil
    Arnold, Jacques (Gravesham)Freeman, Roger
    Arnold, Tom (Hazel Grove)French, Douglas
    Ashby, DavidGardiner, George
    Aspinwall, JackGill, Christopher
    Atkins, RobertGilmour, Rt Hon Sir Ian
    Baker, Rt Hon K. (Mole Valley)Glyn, Dr Alan
    Baker, Nicholas (Dorset N)Goodhart, Sir Philip
    Banks, Robert (Harrogate)Goodlad, Alastair
    Batiste, SpencerGoodson-Wickes, Dr Charles
    Beaumont-Dark, AnthonyGow, Ian
    Bellingham, HenryGower, Sir Raymond
    Bendall, VivianGrant, Sir Anthony (CambsSW)
    Bennett, Nicholas (Pembroke)Greenway, Harry (Ealing N)
    Biffen, Rt Hon JohnGregory, Conal
    Biggs-Davison, Sir JohnGriffiths, Peter (Portsmouth N)
    Blackburn, Dr John G.Grist, Ian
    Blaker, Rt Hon Sir PeterGround, Patrick
    Bottomley, Mrs VirginiaGummer, Rt Hon John Selwyn
    Bowden, A (Brighton K'pto'n)Hamilton, Hon Archie (Epsom)
    Bowden, Gerald (Dulwich)Hamilton, Neil (Tatton)
    Bowis, JohnHanley, Jeremy
    Braine, Rt Hon Sir BernardHannam, John
    Brandon-Bravo, MartinHargreaves, A. (B'ham H'll Gr')
    Brazier, JulianHargreaves, Ken (Hyndburn)
    Bright, GrahamHarris, David
    Brittan, Rt Hon LeonHaselhurst, Alan
    Brooke, Rt Hon PeterHawkins, Christopher
    Brown, Michael (Brigg & Cl't's)Hayes, Jerry
    Browne, John (Winchester)Hayward, Robert
    Bruce, Ian (Dorset South)Heath, Rt Hon Edward
    Buck, Sir AntonyHeathcoat-Amory, David
    Budgen, NicholasHeddle, John
    Burns, SimonHeseltine, Rt Hon Michael
    Burt, AlistairHicks, Mrs Maureen (Wolv' NE)
    Butcher, JohnHicks, Robert (Cornwall SE)
    Butler, ChrisHiggins, Rt Hon Terence L.
    Butterfill, JohnHill, James
    Carlisle, Kenneth (Lincoln)Hind, Kenneth
    Carrington, MatthewHogg, Hon Douglas (Gr'th'm)
    Cash, WilliamHolt, Richard
    Channon, Rt Hon PaulHordern, Sir Peter
    Chapman, SydneyHoward, Michael
    Chope, ChristopherHowarth, Alan (Strat'd-on-A)
    Clark, Hon Alan (Plym'th S'n)Howe, Rt Hon Sir Geoffrey
    Clark, Dr Michael (Rochford)Howell, Rt Hon David (G'dford)
    Clark, Sir W. (Croydon S)Howell, Ralph (North Norfolk)
    Clarke, Rt Hon K. (Rushclifie)Hughes, Robert G. (Harrow W)
    Colvin, MichaelHunt, David (Wirral W)
    Coombs, Anthony (Wyre F'rest)Hunt, John (Ravensbourne)
    Coombs, Simon (Swindon)Hunter, Andrew
    Cormack, PatrickIrvine, Michael
    Couchman, JamesIrving, Charles
    Cran, JamesJack, Michael
    Currie, Mrs EdwinaJackson, Robert
    Davies, Q. (Stamf'd & Spald'g)Janman, Tim
    Davis, David (Boothferry)Jessel, Toby
    Day, StephenJohnson Smith, Sir Geoffrey
    Devlin, TimJones, Robert B (Herts W)
    Dorrell, StephenJopling, Rt Hon Michael
    Douglas-Hamilton, Lord JamesKellett-Bowman, Dame Elaine
    Dover, DenKey, Robert
    Dunn, BobKilfedder, James
    Durant, TonyKing, Roger (B'ham N'thfield)
    Dykes, HughKnapman, Roger
    Eggar, TimKnight, Greg (Derby North)
    Emery, Sir PeterKnowles, Michael
    Evans, David (Welwyn Hatf'd)Knox, David
    Evennett, DavidLang, Ian
    Fairbairn, NicholasLatham, Michael
    Farr, Sir JohnLawrence, Ivan
    Favell, TonyLawson, Rt Hon Nigel
    Fenner, Dame PeggyLee, John (Pendle)
    Field, Barry (Isle of Wight)Leigh, Edward (Gainsbor'gh)
    Finsberg, Sir GeoffreyLennox-Boyd, Hon Mark
    Forman, NigelLightbown, David
    Forsyth, Michael (Stirling)Lilley, Peter
    Forth, EricLloyd, Sir Ian (Havant)
    Fowler, Rt Hon NormanLloyd, Peter (Fareham)
    Fox, Sir MarcusLord, Michael

    Lyell, Sir NicholasPawsey, James
    Macfarlane, Sir NeilPeacock, Mrs Elizabeth
    MacKay, Andrew (E Berkshire)Porter, Barry (Wirral S)
    Maclean, DavidPorter, David (Waveney)
    McLoughlin, PatrickPortillo, Michael
    McNair-Wilson, M. (Newbury)Powell, William (Corby)
    McNair-Wilson, P. (New Forest)Price, Sir David
    Madel, DavidRaffan, Keith
    Major, Rt Hon JohnRaison, Rt Hon Timothy
    Malins, HumfreyRathbone, Tim
    Mans, KeithRedwood, John
    Maples, JohnRhodes James, Robert
    Marland, PaulRhys Williams, Sir Brandon
    Marlow, TonyRiddick, Graham
    Marshall, John (Hendon S)Ridley, Rt Hon Nicholas
    Martin, David (Portsmouth S)Ridsdale, Sir Julian
    Maude, Hon FrancisRifkind, Rt Hon Malcolm
    Mawhinney, Dr BrianRoe, Mrs Marion
    Maxwell-Hyslop, RobinRossi, Sir Hugh
    Miller, HalRowe, Andrew
    Mitchell, Andrew (Gedling)Rumbold, Mrs Angela
    Mitchell, David (Hants NW)Ryder, Richard
    Monro, Sir HectorSainsbury, Hon Tim
    Moore, Rt Hon JohnShaw, David (Dover)
    Morrison, Hon Sir CharlesShaw, Sir Giles (Pudsey)
    Moss, MalcolmShaw, Sir Michael (Scarb')
    Neale, GerrardShephard, Mrs G. (Norfolk SW)
    Nelson, AnthonyShepherd, Colin (Hereford)
    Neubert, MichaelShersby, Michael
    Newton, Rt Hon TonySims, Roger
    Nicholls, PatrickSkeet, Sir Trevor
    Nicholson, David (Taunton)Smith, Tim (Beaconsfield)
    Nicholson, Emma (Devon West)Soames, Hon Nicholas
    Onslow, Rt Hon CranleySpeller, Tony
    Oppenheim, PhillipSpicer, Sir Jim (Dorset W)
    Page, RichardSpicer, Michael (S Worcs)
    Paice, JamesSquire, Robin
    Parkinson, Rt Hon CecilStanbrook, Ivor
    Patnick, IrvineSteen, Anthony
    Patten, John (Oxford W)Stern, Michael
    Pattie, Rt Hon Sir GeoffreyStevens, Lewis

    Stewart, Andy (Sherwood)Waldegrave, Hon William
    Stewart, Ian (Hertfordshire N)Walden, George
    Stokes, JohnWalker, Bill (T'side North)
    Sumberg, DavidWalker, Rt Hon P. (W'cester)
    Summerson, HugoWaller, Gary
    Tapsell, Sir PeterWard, John
    Taylor, Ian (Esher)Wardle, Charles (Bexhill)
    Taylor, John M (Solihull)Watts, John
    Taylor, Teddy (S'end E)Wells, Bowen
    Temple-Morris, PeterWhitney, Ray
    Thatcher, Rt Hon MargaretWiddecombe, Ann
    Thompson, D. (Calder Valley)Wilkinson, John
    Thompson, Patrick (Norwich N)Wilshire, David
    Thorne, NeilWinterton, Nicholas
    Thornton, MalcolmWood, Timothy
    Thurnham, PeterYeo, Tim
    Townend, John (Bridlington)Young, Sir George (Acton)
    Townsend, Cyril D. (B'heath)
    Tredinnick, DavidTellers for the Ayes:
    Trippier, DavidMr. Robert Boscawen and
    Waddington, Rt Hon DavidMr. Tristan Garel-Jones.
    Wakeham, Rt Hon John

    NOES

    Jones, Ieuan (Ynys Môn)
    McGrady, EddieTellers for the Noes:
    Nellist, DaveMr. Dafydd Wigley and
    Thomas, Dr Dafydd ElisMrs. Margaret Ewing.

    Question accordingly agreed to.

    I shall now call the Chancellor of the Exchequer to move the motion entitled "Amendment of the Law". It is on that motion that the Budget debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week, and they will then be decided without debate.

    Budget Resolutions And Economic Situation

    Amendment Of The Law

    Motion made, and Question proposed,

    That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
  • (a) for zero-rating or exempting any supply;
  • (b) for refunding any amount of tax;
  • (c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
  • (d) for relief other than relief applying to goods of whatever description or services of whatever description. —[Mr. Lawson.]
  • [Relevant documents: European Community Document No. 9561/87, Annual Economic Report 1987–88 and the unnumbered document, Annual Economic Report 1987–88 (final version as adopted by the Council).]

    5.27 pm

    On a point of order, Mr. Deputy Speaker. After this afternoon's demonstrations, is it too much to hope that the House will at last take a grip of itself and, when people get themselves named in the way in which it happened this afternoon, we shall suspend them for six months without pay?

    The Budget that we have heard this afternoon, especially the latter part of it, generated anger and resentment against the immense injustice of the attitude taken by the Chancellor of the Exchequer in his view of the best off people in our society and the gift, in excess of £2 billion a year, awarded to them in tax concessions. We compare that with the fact that he offered nothing at all to the National Health Service. We compare his handout to the richest in Britain with his offer of a puny, marginal and negligible amount to those who constitute the average people of our society.

    In those circumstances, the anger generated is understandable. However, I believe that, faced with that situation, I, my comrades and my hon. Friends should take the view: do not get mad, get even. I assert again that in this House and everywhere else in this democracy argument is always superior to the form of action that we have seen this afternoon.

    When the Chancellor reached that monumental concession to the best off, I noticed that the cheering from the Conservative Benches was even louder than when he made the concession on the standard rate. That is the system of values that is facing us. Those Conservative Members are the people who back the idea of making awards in the form of tax concessions that are worth 48p per week to those whose income totals £100, including various benefits, who offer £3·98 per week to somebody on £200 per week, such as a married man with two children, but who give £82·96 per week to someone who earns £1,000 per week. That cannot be right. It cannot be right in terms of incentives, because over the past eight years we have seen additional tax reliefs for the best off, but we have not seen a consequent increase in investment in this country — [Interruption.] Manufacturing investment is still 14 per cent. lower today than it was in 1979, despite the concessions.

    I often wonder why Conservative Members feel that to get the rich to work harder they must give them more, but to make the poor work harder they will give them less. This afternoon we have seen a Budget upon which we shall have to rely on St. Matthew for apt, accurate and adequate comment, because literally, to a degree that has never been known before in this Chamber, "To them that hath shall be given even unto abundance, and from them that hath not, shall be taken away, even that which they have." That is what is happening. That is the only judgment that can adequately be offered on a Government who, in March, can offer immense tax relief to the richest, and in April will take away housing and social security benefits from those who are the poorest in our country.

    We are constantly and rightly reminded that Governments do not have any money of their own—they have only the people's money. Against that background, which must enjoy universal support as a proposition, it can be said with absolute certainty that an overwhelming majority of the British people wanted their money to be dedicated to the National Health Service. They wanted that because they realise that the National Health Service is grievously under-funded. They wanted it because they value that service above all other priorities, even above immediate personal gain. They wanted it because they know that tax cuts do not buy treatment, that tax cuts do not pay nurses, that tax cuts do not open hospital wards or operating theatres and that tax cuts do not shorten waiting lists — [Interruption.] I hear Conservative Members saying that tax cuts do pay the nurses. Well, those hon. Members will have to face the nurses in their constituencies and say why a staff nurse, at the top of the current pay scale, gets £3·40 per week out of today's tax concessions, but even that will he eaten away when charges are made on nurses working in hospital.

    There is no balance of justice in a Government who make such awards and at the same time deny the resources that are demanded by an overwhelming majority of people — people of all politics and of no politics, from every part of the country; people inside the Health Service, and those outside it; those who use the Health Service and those who do not. All those people have gathered together in a massive consensus, saying that today should have been National Health Service day.

    In disregarding the emphatic preference of the British public the Chancellor has shown that while some people give their lives to the National Health Service, and some people owe their lives to the National Health Service, he does not give tuppence for the National Health Service. In refusing to listen to the priorities of the people — including, to their credit, many in his own party — the Chancellor earns public disdain that will not be repaired even if the Government meet the nurses' and health workers' pay award in a couple of months' time. Even if that were to occur—we can only hope that it will—it would still leave an immense amount to do to try to bring the Health Service out of crisis.

    I make an appeal to the Chancellor even now. As a start, when he replies to the debate next Monday, he could seek to redeem himself to some extent by giving an undertaking that the deficits currently being carried by the health authorities will be financed so that they do not have to carry them over into the next year, thus ensuring that they begin the next financial year with disadvantage and undermining any award that is made to the nurses and health workers. The Chancellor could give that undertaking. If health authorities carry over those deficits, they start the year in disadvantage. The crisis of under-funding is then a disaster that is waiting to happen, as it most surely will without adequate funding before the end of this year.

    To govern is to choose. It is a tragedy that even though the Chancellor has the means, and even though there is the most urgent need, the Chancellor has deliberately chosen not to make today National Health Service day. Then again he has not chosen to make it national anything day —[Interruption.] Not for 15 million people — [HON. MEMBERS: "It is Budget day."] All right, but it is Budget day also for those 15 million people—more than one in four of the British people—who will not benefit from the Chancellor's income tax cuts, some of them because they are too poor to pay income tax, others whose pay is so low that the Chancellor may be giving them a few pence or even a pound or so with one hand, but after 11 April the Department of Health and Social Security will take it away with the other.

    This is not a "national anything" Budget, because there is nothing in this Budget to blunt the cutting edge of the changes that are to be made to the social security and housing benefit regulations next month. Some of the poorest people will lose up to 96p in any pound of gain that they make from tax concessions. We hear about the incentive effect of making tax cuts. Indeed, the Chancellor told us about it again today. He said, "There is a strong economy because of initiatives and enterprise and the incentives that come from tax cuts."

    How would the right hon. Gentleman feel if he earned £105 or £110 per week and the marginal rate of tax on his income was 96p on what is already a poverty income? What about standing on one's own feet? What about incentives? What about the spur to go to work? I know what will happen when people decide that they cannot afford that disadvantage and retreat from work because they are being fined for going to work. The Chancellor and his colleagues will come here next year and give us further lectures about "scroungers". We will hear the Secretary of State for Social Services talking about the "dependency culture". How dare the Government say such things when they are doing this to our people and our country.

    On top of that, a pensioner couple with modest savings automatically become disqualified from support from housing benefit as a consequence of having those savings. Where is the reward for thrift, or — to use the Chancellor's favourite word — "prudence", when such people are fined by the loss of their weekly help because they have taken care and have had the thrift to put a little bit aside to help them through their retirement?

    It is not only the poor and the low-paid that the Budget does not serve. It does almost nothing to help those who are trying to export from Britain, but it does give some real help to those who are trying to import into Britain. There is hardly anything in the Budget for jobs in Britain, but there is a fair bit in it for jobs abroad. There may be some prospect for short-term growth, dependent upon credit and consumption in such an approach—there just might be—but there is no prospect of dependable, sustainable growth. That is the problem. The Chancellor's priorities never extend to encouraging investment in productive capacity, in research and development, in the training for skills and in the development of those skills. What we have had today is the extension of the business extension scheme — [HON. MEMBERS: "Expansion scheme."] Well, we shall see how much it will expand business.

    That scheme offers an inducement to buy up houses and blocks of houses, and offers subsidies to the landlord at the same time as the Housing Bill, which is going through the House, will hammer tenants in both the private and public sectors. What an imbalance. It is not a business expansion scheme, but a Rachman expansion scheme. That is what will happen.

    There is nothing in the Budget to lay or build the foundations for sustainable economic growth and for future strength in the British economy. That is the major reason why, after eight oil-rich years, our exporters' share of world markets in manufactures is down by 20 per cent. and our producers' share of the domestic market is down by 30 per cent. If we were gaining in the way that the Chancellor has sought to suggest, those figures would be reversed. We would be gaining substantial shares in the world and domestic markets.

    In the eight oil-rich years, which have meant enormous bonuses to the Government and the Chancellor at a rate of at least £5 billion a year—sometimes twice or nearly three times that figure—they have never developed the economy, never sponsored production and never given us that extra competitive edge that would reverse the current position. That refusal to follow any systematic strategy to strengthen our industry is the major reason why our exports have gone up by 30 per cent.—yes, to record levels—while our imports, in the Tory years, have gone up by 50 per cent. This nation of modern makers and traders cannot sustain that continuing divergence between increasing imports and increasing exports at a much slower rate. Surely the Chancellor can see the rationale of that. Surely he must want to sustain our industry and to give our industrialists, the workers in the industries—the inventive people — a real fighting chance in the world market.

    That chance has not come so far. That is why we can measure our trade deficit in this oil-rich country as £9·6 billion. That sum is too big to be balanced by the combined sale of oil and services. The Government have had this marvellous, unsolicited bonus of oil and what a judgment of them it is that they should he carrying a balance of payments deficit of any size when they are oil-rich, energy-rich and do not have to depend on the importation of those essential commodities.

    The Chancellor has spoken about the gains in productivity and in competitiveness, and any improvements are obviously welcome. When we consider the international trade figures, the domestic market share and the balance in manufactured trade deficit, we may say that the Chancellor, in balancing his Budget, deserves the name "Lucky Lawson". However, in terms of balancing the trade of our country he must be known as "Loser Lawson"— that is the only name that fits.

    What about the Budget surplus? That surplus has come from three major sources. The first is oil revenues—the £6 billion a year about which the Government have spoken. The second is the upsurge in VAT receipts. VAT has been substantially levied on the massive increase in imports. They have been bought with credit and have therefore added immensely to the general problems faced by the Chancellor in dealing with the economy. Indeed, the extent to which credit and debt have increased for British households under this prudent Government, this non-borrowing Government, has meant that domestic debt has increased from £80 billion a year—less than a third in equivalent value to GNP—to £280 billion a year—two thirds in equivalent value to GNP.

    I am sure that the Prime Minister would say:
    "Neither a borrower, nor a lender be".
    That represents the old-fashioned Grantham prudence that the right hon. Lady learnt. Well, she does not recommend it to the rest of the economy, because the stimulus to growth about which the Chancellor has been proud to talk has been sponsored and substantially sustained, not by any virile developments in the economy or a new competitiveness, but as a result of a massive expansion of household debt in our country. A bill must be paid.

    The third area from which Budget surplus has come is the once-and-for-all sale of national assets at the rate of about £5 billion a year. On that basis, anyone who has a house could make a budget surplus. All that he has to do is sell his house and move into rented accommodation. For a few years he would have a budget surplus, but he would not have a house to go back to. He would have lots of money, but no security. That is how the Chancellor has money to spare. The sell-offs cannot be sustained, any more than the VAT revenues or the oil revenues can be sustained. They are all short-term bonuses bringing short-term benefits from someone who is now becoming a short-term Chancellor.

    Our country must succeed in the long-term, and that is why the priorities in this Budget should have been investment in production, investment in export and sales, in research and development, in health and social justice. Such an approach would have meant not only that the Government were making proper provision for our strength in the future, but that, in the present, they would be increasing competitiveness, combating the expansion of debt, using national resources in a way that does not significantly add to imports or inflation, generating employment—full-time, properly paid jobs, not schemes that offer half-time, quarter paid jobs that are part of the repair outfit employed by the Government. That approach would have represented real prudence and real profit to our country and our people. The Budget does not offer that. This Chancellor has again, put the wealth of the very few before the wealth of the nation, and always before the health of the people.

    On a point of order, Mr. Deputy Speaker. During the course of the Chancellor's speech—[nterruption.]

    During the course of his speech, the Chancellor, in a snide comment, referred to my right hon. Friend the Member for Leeds, East (Mr. Healey) as being "obsolete". That is in line with the comment made by the Prime Minister the other day that Labour has no guts. I will now point out to the House, to those few Members on the Conservative Benches, that my right hon. Friend had a distinguished war record and was a beach master at Anzio. Some of us who were in the forces during the second world war resent such statements.

    Order. The hon. Gentleman has made his point. I did hear the expression and, discourteous and offensive as it might have been, I do not think that it was unparliamentary.

    5.49 pm

    If hon. Members consider the last hour, some will conclude that the House has not covered itself with glory. I hope that in the next 10 minutes I shall be able to reduce the temperature a little and deal with some of the issues raised in the Budget.

    Order. Will those hon. Members who are leaving the Chamber do so quickly and quietly, please?

    I want first to congratulate my right hon. Friend the Chancellor on his fifth Budget speech. His previous four Budget speeches were well constructed, to the point, and commendably brief. Today, my right hon. Friend has maintained the high standards that he established on those occasions and produced an interesting and skilful Budget. Hon. Members should be grateful for that at least, even if they do not necessarily agree with the provisions in the Budget.

    My right hon. Friend has presented a complicated package this afternoon which requires and deserves deep study rather than too much instant reaction and comment. Let me warmly welcome some of the Budget's features.

    I warmly welcome the changes in what my right hon. Friend called the taxation of marriage. I am pleased that husbands and wives are to be taxed separately in future. I would only say that I suspect that not all married women will wish to take advantage of that when they come up against the problems of dealing with their own taxation.

    I also welcome the increase in the VAT threshold to £22,000. I do not complain too much about the increases in the duty on alcohol and, as a whisky drinker, I am pleased that there is to be no increase in that area. The Scottish nationalists can at least take some consolation from that.

    I welcome the changes in capital gains tax. There will certainly be much more equity in its operation in future. But I must confess that, probably like most hon. Members, I was surprised that it was possible to make such changes at such low cost to the Exchequer.

    I welcome, too, the change in the thresholds and the increase in income tax allowances. That was double the necessary rate on the basis of the Rooker-Wise-Lawson amendment in the late 1970s. It is noteworthy that personal allowances are now worth 25 per cent. more in real terms than in 1978–79.

    As a Member of Parliament representing a largely rural seat I was not quite so keen — and I know that my constituents will not be quite so keen—on the increase in petrol duty. However, we have been used to such increases from both Labour and Conservative Chancellors for some considerable time.

    The specific measures in any Budget are usually quickly forgotten, and, rightly or wrongly, I have no reason to believe that that will be any different on this occasion. But the consequences of the measures in this Budget, as in other Budgets, and of other decisions in the economic sphere will be with us for a long time.

    Of course, we are not complete masters of our own destiny. Our economy is influenced by international economics and decisions taken by other Governments. However, I have noticed that that tends to be exaggerated by Governments when things go wrong and under-estimated when things go right. Nevertheless, a balance must be maintained and we should be careful not to pretend that we have no control over what happens in Britain.

    My right hon. Friend has been faced today with much more difficult decisions in the Budget than most commentators have acknowledged. It is too simplistic to suggest that, because of the buoyancy of revenue, it was merely a matter of determining the size of the tax cuts. The current state of the balance of payments placed substantial constraints on his freedom of manoeuvre. At the same time, it was important to maintain and increase the level of domestic demand to ensure a continuation of the high rate of growth of the past few years and the consequent fall in unemployment. Therefore, my right hon. Friend was right to use some of the substantial surplus to maintain growth, and his Budget judgment, although generally cautious, was probably about right. However, I am not so sure about the make-up of his package.

    After having had a sizeable balance of payments surplus for some years, there has been a deterioration in the past two years. Although last Friday's revised figures showed that the situation in 1986–87 had not been as bad as had been assumed, the situation is far from satisfactory. The revised figures show that we had a small surplus of £46 million in 1986 but that that had deteriorated into a deficit of £1·68 billion in 1987.

    In the current year, as my right hon. Friend warned us this afternoon, there is likely to be a further deterioration in the balance of payments. It may be true that we can afford to run a deficit in the short term, but we cannot afford to do so indefinitely. In any event, it would be folly to dissipate the massive capital investments overseas that have been built up as a result of North sea oil over the last few years by consumer spending.

    Unfortunately, that may be one of the consequences of today's tax cuts. Although I am sure that the tax cuts will be popular with the recipients, they will generate more consumer expenditure. In recent years there has been a strong tendency for additional consumer expenditure to find its way into an increased demand for imports rather than merely for the product of our domestic industry.

    Therefore, my right hon. Friend's tax cuts involve a risk that some of the extra money released will find its way into imports. Since we are already in deficit on the balance of payments, and are heavily in deficit in trade in manufactured goods, it was unwise at this time to introduce tax cuts and so risk imposing further strains on an already weak balance of payments.

    In the particular circumstances that obtain at present, I would have preferred my right hon. Friend to dispense his largesse in the form of public expenditure projects where import potential would be low or non-existent. In that respect, the N H S obviously comes to mind. Unlike the Opposition, I do not complain that there has been a reduction in expenditure in the Health Service over the last few years. That is not true. We all know that the only cuts in the Health Service that have taken place in the past 20 years took place under a Labour Government. None the less, it is possible further to increase expenditure in the Health Service and I would have preferred to see that done today. Apart from anything else, an increase in public expenditure would have enabled us to maintain a buoyant domestic demand and so protect the balance of payments. To me, it would have seemed a safer choice in the current conditions.

    Having said that, I want to emphasise my support for my right hon. Friend's Budget judgment because of the importance of maintaining a high level of demand. Over the past 18 months the buoyancy of demand has enabled Britain to achieve a high growth rate, and, as a consequence of that, unemployment has fallen from 3·25 million to about 2·5 million—[Interruption.] I do not know whether the hon. Member for Glasgow, Cathcart (Mr. Maxtor) thinks that this is funny, but the 750,000 people who are no longer out of work, but who were 18 months ago, welcome that warmly. The Budget will maintain that buoyant demand.

    Of late I have detected an increasing complacency about unemployment, and there have been some rather silly suggestions in some quarters that our economy is becoming over-heated. As long as 2·5 million people are out of work that complacency is unwarranted and the idea that there is over-heating is nonsensical. Between 1945 and 1974 we had almost full employment. It is true that the level fluctuated a little, but throughout that period we managed to maintain employment at a high level. Twice, briefly, unemployment exceeded 1 million and twice, also briefly, it was as low as 1·1 per cent. of the working population. That was in 1955 and in 1965.

    When we look at what was possible during the 30 years after the war, we can see that we have a long way to go to get unemployment down from 2·5 million to a level that is acceptable to our people. To achieve this, an essential prerequisite is the continuation of a high rate of growth, and I believe that my right hon. Friend's Budget will achieve that. However, as I have explained, I would have preferred the public expenditure route to have been taken rather than the tax-cut route.

    Another prerequisite for reducing unemployment is that sterling should not be overvalued. We all remember the dreadful damage done to British manufacturing industry and employment in the early 1980s when sterling was overvalued. The recent increase in the value of sterling is deeply worrying, although I welcome what my right hon. Friend the Chancellor has said about that this afternoon. I hope that he will continue to do everything that he can to reduce the value of sterling to a more sensible level, and that he will do that by reducing interest rates and taking whatever other measures are necessary. I hope also that he will continue to pursue the highly successful policy of exchange rate stability that he has pursued for the last 12 months.

    Among other things, that means that Britain should join the exchange rate mechanism of the European monetary system, because that would give us much greater stability for more than 60 per cent. of our trade. This is long overdue. I hope that my right hon. Friend will not let ideological obsessions divert him from exchange rate stability and from British membership of the exchange rate mechanism of the EMS. This would be greatly in the interests of our economy and of the economy of Europe, and ultimately it would be greatly in the interests of the world economy.

    6.2 pm

    I am grateful to be called by you, Mr. Deputy Speaker, so early in this debate. In my five years in the House this is the most important Budget statement that I have heard. I came into the House in 1983 when the Chancellor made his first Budget speech. This is one of the most tempestuous Budget speeches that we have heard. The reason for saying that is clear, because the speech demonstrated the divide in philosophy between the Government and the Opposition. That was most precisely marked when we discussed the reduction in the top rate of income tax to 40 per cent. That showed the divide between the Opposition and the Government.

    If anything, this is the most capitalist Budget that we have seen in the House this century. The Economic Secretary to the Treasury nods his head in approval. It is an offensive Budget to all our people. It is wrong to believe that our people wish to have tax cuts at any price—cuts that will benefit their pocket to the detriment of people as a whole. It is also wrong to suppose that we can ignore the spontaneous clamour in the National Health Service about the cuts that have taken place there.

    The Chancellor gave a series of figures about the increases in public expenditure, and at Prime Minister's Question Time the Prime Minister also gave those figures. Those are the normal increases that we see in society year in, year out, and they are a reflection of inflation and pressure on the economy. They do not reflect real spending in the economy.

    Hon. Members should consider what the Government have been doing in the Health Service. In Middlesbrough a hospital was closed because the health authority had to save £1 million. It made that saving by closing the Carter Bequest hospital.

    It was wrong of the Government to give the nurses their pay increase before the last election and then to say to health authorities that they had to fund it out of savings. Obviously, it was right to give the nurses the benefit of an increase, but the way in which the Government funded it was wrong, and that has been the cause of the disruption and spontaneous protest in the Health Service. The Budget has not done anything to rectify the imbalance that is creeping into our economy. The public services are being starved of money, but a wide range of people will do well out of this Budget.

    The Chancellor said that by reducing the top rate of income tax to 40 per cent. those on top incomes will work harder. That simply repeats the shibboleth that we have heard for many decades that people will work harder if they are given such an incentive. In this leisure world it is more probable that people will use the extra money to improve the quality of their life and to enjoy the leisure facilities that are available to them. In any event, there is no evidence whatever that people in business, those with responsibility, will be prepared for financial gain to work harder than they work now. That is one of the great shibboleths of our time and it is certainly one of the shibboleths of the Government.

    People who are not so well off will gain nothing from the Budget. In 1979, I remember sharing a platform in Newcastle with Jack Jones, the leader of the Transport and General Workers Union. Mr. Jones told the audience that if the Conservatives were elected they would cut the benefit link between earnings and price rises, whichever was the higher. That was the basis upon which benefits were based. That was our philosophy, and we aimed to protect people who could not protect themselves by giving them the benefit of an increase either on the basis of increased earnings or increased prices. The Conservatives said that they would cut that link, and that was the first thing that the then Chancellor in the 1979 Conservative Government did. He based the increase in benefits not upon earnings but upon price increases. Inflation has come down and earnings have risen above inflation, and we have seen the gap between those who have and those who have not growing steadily. That is a direct consequence of Government policy and philosophy, and it is creating tensions and pressures in our society.

    The argument has often been advanced that there is a link between violence on our streets and unemployment and that it is between those who have hope and those who have not. The Budget will do less for those who do not believe that they have a place in our society than it will do for the better off. The essential philosophy of the Opposition is that we want to see an egalitarian society. The priorities that we have had since the 1970s are not the priorities of the Government. One of our priorities is to keep people in work.

    The Chancellor said that the Budget surplus was £3,000 million. It is perhaps no coincidence that we have 3 million unemployed, because it means that for every £1,000 of surplus there is a person unemployed. That is wrong. This is a financial Budget, not an industrial Budget. It will do nothing for our trade or industry and it will not lead to more investment in industry. We would like to see interest rates coming down. That would help industry, because the cost of borrowing would be lower and investment would go up. The Budget placed no emphasis on jobs or on the investment that we want to see in industry. It does nothing to encourage investment in manufacturing to offset the balance of payments crisis that is coming on our manufactured goods.

    That brings us back to Tory philosophy. Getting rid of the exchange rate in 1979 led to massive investment in the United States, and now in Europe, by British investors. In the last Parliament I asked what was the return on that investment, and a Conservative Back Bencher, Mr. Stefan Terlezki, who is no longer a Member, said that it was £5,000 million a year. That is a return to Victorian values. In the last century, that was how our economy worked. Our balance of payments deficit on manufactured goods was covered by the invisible earnings of the City of London.

    Why has that investment not taken place here? Why was it more fit and proper to invest in real estate in the United States, Germany, France and Belgium than to invest in our own industry? That philosophy has turned out to be not simply anti-worker, but anti-British. It has reduced our future status as a nation state.

    The Chancellor is storing up many troubles and difficulties for the years to come. As was said by my right hon. Friend the Member for Islwyn (Mr. Kinnock), our economy was based on the oil revenues, which went up again after Sheikh Yamani resigned in Saudi Arabia. The figures are clear: the public sector borrowing requirement has gone down as the oil revenues have gone up. Those revenues have simply been used to ensure that we, as a nation state, do not borrow money.

    As the nation, under the present Government, does not borrow the money, where does the money go? It does not crowd out any more the private sector; it goes straight from the Treasury to the City of London. Over the past few years, the alliance between the Treasury and the City has supervised the sale of national assets. When the Conservatives came to power, they wished to sell those assets on the basis of a doctrine: they did not believe in natonalisation.

    The concept of privatisation is legitimate. It was an ideological commitment that the Conservative party made at the time of the 1979 general election. But, as the public sector borrowing requirement came down, the City of London was able to take up more and more public assets. Now the Secretary of State for Energy is about to privatise the electricity industry for £28,000 million, and the money is there because the Government have ensured that it should be.

    As well as the sale of assets and North sea oil, there is the massive consumer boom referred to by my right hon. Friend the Leader of the Opposition. That boom is based on plastic money. Although interest rates are at 28 or 30 per cent., people are prepared to indulge in the consumer society as long as they can use plastic money and the payment is made later. They do not look at the 28 per cent. interest rate. That, too, will be a problem for the Government, but it is a house that they have builded over the past five years.

    Having sat through five Budget speeches, I feel that we, as a nation, have been set up for the launch of a capitalist society. The Government do not mind a man standing on his own two feet, as long as he stands on the backs of those poorer than himself. The moral lesson that they wish to teach is: "Stand on your own two feet, but stand on the back of someone poorer than yourself who has not got and will never have your advantages."

    The divisions in our society are getting deeper and deeper. This is a financial Budget, but it is also a political Budget, cynically aimed at those who are doing well in society in the hope that those who are poorer will not understand it, and that those who are doing well will be seduced into not caring for their fellow man. That is the wrong philosophy, and it will backfire. The day will come when there will be a backlash against the Government's principles — against the idea that money is all that counts, and that people do not count. When that backlash comes, there will be a significant turning of public opinion away from this Government.

    6.13 pm

    I am grateful for the opportunity to make an early contribution to the Budget debate, Mr. Deputy Speaker. I do so with some diffidence, however, because of the penalty faced by those fortunate enough to catch your eye so soon after the Chancellor has sat down. They deny themselves the opportunity to read a more careful analysis of the Budget in the press the following day, when those who are expert at analysing such a major and complex financial statement are able to present it in perspective. We, who may have missed subtle details, can then understand the full implications of the statement for various aspects of national life. Inevitably, my own contribution will not be aided by that expert opinion. It will be based merely on immediate reaction.

    It may not surprise some of my hon. Friends to hear that I find much with which to agree in what was said by my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox). I shall not repeat his observations line by line, but I shall start, as he did, by congratulating my right hon. Friend the Chancellor. His speech was most impressive. This is a positive Budget, and, like my hon. Friend, I believe that my right hon. Friend's judgment is about right. I welcome the Budget's reforming aspects.

    If my right hon. Friend can be said to have risen to the occasion, the Leader of the Opposition and the Labour party certainly have not. I am surprised that the right hon. Gentleman was prepared to insist, both today and before the event, that this was meant to be a Budget for the National Health Service. Apart from misreading what the Budget is about, as opposed to the Autumn Statement on public expenditure—[Interruption.] If the hon. Member for Durham, North-West (Ms. Armstrong) wishes to gain a reputation in the House for making sedentary comments, so be it, but I am not prepared to give way.

    The Budget is not about making decisions on extra public expenditure. The public have been considerably misled by the Opposition campaign in that respect. I am wholly committed to the success of the National Health Service, and I believe that the Government's record is much better than Opposition Members allow. They conveniently forget their own record on the NHS. Of course it is wrong that people should be kept waiting for such an important state service, but it has always been true that the list of things that we want to do—in health, in education or in any other regard—remains long, and lengthens as our expectations increase. That is bound to continue. The test of the Budget is whether it will control the economy in such a way as to ensure that more resources are generated for the Government to sustain such services.

    I believe that the record of the present Government, and the present Chancellor, is very good. Certainly it is superior to anything done by previous Labour Chancellors.

    Not in the short time that remains. I am sure that the hon. Gentleman will understand.

    The right hon. Member for Islwyn (Mr. Kinnock) would have done better to listen to his hon. Friend the Member for Middlesbrough (Mr. Bell)—whose maiden speech I once had the pleasure of following—and to consider the Budget from the point of view of the success of British industry. That success is also tied up with the amount of resources to be generated for my right hon. Friend and his successors to fund services such as the NHS. The real test of the Budget is what it will do to sustain the economy, and industry within the economy.

    My right hon. Friend said that there was a need for industry to keep firm control of its costs, and I agree with that. However, he has an opportunity to help industry to control its costs. I applaud the effort to retain a stable currency. Many industrialists have told me that they are prepared to settle for an exchange rate with either the dollar or the deutschmark, which may not be ideal for their businesses, if they can at least reckon on its being stable and continuing for a year or more. It is the constant change that is disruptive and makes business planning so difficult. A Budget that can help ensure currency stability as far as is possible is to be welcomed, and I echo the comments made by my hon. Friend the Member for Staffordshire, Moorlands, who said that the Government should take the decision to join the exchange rate mechanism of the EMS. That would help the Government to manage the exchange rate for the benefit of our industry.

    I also hope the Budget will help to reduce interest rates, which is also crucial to industrial development in many sections of industry. Such a reduction is not the only thing that affects investment decisions, but in certain industries it has an effect, so it is important to reduce interest rates to achieve an overall improvement in our investment rate.

    It is also important that there should be enough resources for industry to engage in a faster rate of research and development. It is truly alarming that there is a widening gap between us and some of our competitor countries in Europe in this area. I do not need to be associated, as I am, with a number of industrial companies to be able to make that point in a purely generic way. It is vital to remedy Britain's backlog in research and development, and I had hoped that the Chancellor might have found an extra 1 or 2 per cent. to take off corporation tax. I know that the Chancellor is proud of his record on corporate tax, but any further margin that could have been found to encourage industry to invest more in research and development would have been welcome.

    The Leader of the Opposition is also wrong to make the NHS the criterion by which to measure the Budget as opposed to the need to move towards the creation of a single European market within the Community. I should not be averse to moves towards tax harmonisation, which will surely come upon us. I am probably a lone voice in the House in not being prepared to say that some of the rather difficult political decisions that will be involved in tax harmonisation for the British Government should be seen as obstacles to the creation of a single European market, which would benefit this country enormously. I am prepared to take as objective a view as possible of the Government's negotiations on that. If the Chancellor had wanted to chance his arm with one or two moves in that direction today, I would not have grumbled.

    On the other hand, the Chancellor has moved independently on petrol and cigarette duty. I welcome the further boost that he has given to "clean" cars through widening the differential between unleaded and leaded petrol—and he could have widened it still further. That would have been a further help. He remarked on the number of stations that now supply unleaded petrol, and it shows a gratifying rate of increase, but there are still not enough of them for customers to be able to rely on unleaded petrol being available at their local stations. I have counted only one in my constituency so far. So I welcome what my right hon. Friend did, but he could have gone further—perhaps at the expense of imposing a greater tax on cigarettes. If taxation can be used to emphasise the need to be environmentally sound, that is good.

    I particularly welcome the fact that my right hon. Friend has doubled the rate of increase in the tax threshold —doubled what it would have been if it had been kept at the rate of inflation. That must help many people in the country, especially prudent elderly people who have put money by. So, although some of them may suffer from changes in housing benefit, this may be a way of compensating them, because probably quite a large number of them are taxpayers.

    I am glad that the Chancellor emphasised improving thresholds as much as he did. In some ways, I am surprised that his reforms did not go further on mortgage tax relief. He would find that many of us are prepared to think the unthinkable and tackle some of the special exemptions to which he referred, so that a lower rate of personal tax could be achieved in due course. He will have to return to this issue if he is to achieve a standard rate of 20 per cent.

    Unlike the hon. Member for Middlesbrough, I did not find this an offensive Budget. It is designed to maintain economic growth in the country, which is the best guarantee of improving the living standards of its people. I hope that the Government's policies will be designed to improve the living standards of all our people, and I believe that the Budget will help to maintain that prospect this year and in the future.

    6.25 pm

    Having now heard five Budget speeches from this Chancellor, I would not mark them high for technical merit, but he has a well-crafted method of putting them over and gets high marks for artistic impression. His speech today was subject to disturbances, and, however much one understands the strong reaction to some of the Chancellor's proposals, it is a sad day for free speech in the House of Commons if unpalatable views have to give way to the tactics of the terraces. I hope that that was a passing aberration that will not become a more regular feature of our debates.

    The background to the Budget has been canvassed in the press over many weeks. The hon. Member for Staffordshire, Moorlands (Mr. Knox) said that he despised any comments to the effect that the economy was overheating. While I agree in a general sense, he would probably accept that, in the more prosperous parts of the country, there are bottlenecks, with localised overheating and inflationary pressures. The credit boom is evidence of that. At the same time we have an increasing balance of payments problem. Today, the Chancellor minimised that when he said that there would be a £4 billion current account deficit by the end of the year—but that was only about 1 per cent. of GNP. If he had been sitting on the Opposition Front Bench, he would have made rather more of that.

    I fear that the Budget's approach will not help these problems. The Chancellor had an opportunity to do something constructive with the revenues that he has, but he seems to have missed it. The bulk of them will go on tax cuts for the rich. I generally welcome the increase in thresholds that has been mentioned. It will take many people out of tax, but there is nothing in the Budget for those who are not in employment and whose income will possibly fall as a result of social security changes at the beginning of next month. They never even get to the present thresholds, let alone the higher ones. Even those who will benefit to some extent from the increase in tax thresholds may find themselves disadvantaged by the interaction of the tax system and employee's national insurance contributions which, for some, can produce high marginal rates of tax as they move into taxable wage levels.

    There is little time, and other hon. Members want to speak.

    I doubt whether the tax cuts that have been proposed will take the heat out of the economy in the parts of the country that appear to be overheated. As the hon. Member for Middlesbrough (Mr. Bell) said, there is no substantive body of evidence to show that if highly-paid people are taxed less they will produce more and their enterprise will be stimulated. I suspect that the vast majority of people who have been paying the high levels of tax are not in the sort of wage structure in which they are paid for doing overtime. It may be suggested that if people have more money they will use it to increase their leisure facilities and possibly buy more luxury consumer goods. So, although the Budget may well be a vehicle for growth, it may prove to be a vehicle for growth in some of the countries that export to us. It is more likely to add to our balance of payments problem than to solve it. The balance of payments problem could be exacerbated further if the value of the pound were allowed to go up and our exports became less competitive.

    With regard to our competitiveness, the Chancellor's comments were interesting. He said that the onus would always be on employers to keep down unit costs and wages in order to make their goods more competitive. That comes rather oddly from a Government who, when they started out in 1979 totally hooked on monetary policy, saw little role for cost-push inflation; it was all subject to the money supply. Wage rates, on their theoretical analysis, had little to do with it. There now seems to be some appreciation that labour costs are a factor, as indeed would be an increasing value of the pound.

    I agree with the hon. Members for Saffron Walden (Mr. Haselhurst) and for Staffordshire, Moorlands on the importance of a stable exchange rate. We on this Bench have for many years advocated membership of the exchange rate mechanism of the EMS. One suspects in one's heart of hearts that that is what the Chancellor would have loved to announce today, but it would appear that 10 Downing street is the one thing that stands between Britain and membership of the EMS.

    Equally important, and related to this, is interest rate policy. Many would like to see interest rates come down in order to stimulate investment. The Chancellor is caught in a dilemma. He is worried, as he indicated at one stage in his speech, that by reducing interest rates he might give a further twist to the credit boom. Perhaps we have used interest rates for too long as a sledgehammer. If they are increased, this affects companies' willingness to invest and has an effect on young couples who are thinking of buying a house but are looking at the mortgage payments. It may well be time for us to start looking again at the introduction of credit controls. Hire purchase controls would perhaps have been a better way of controlling that side of the economy, without having to resort to the use of interest rates, which have so many other ramifications.

    Just as fundamentally, this Budget strategy is wrong in the long term. The Chancellor has boasted about the receipts from the sales of capital assets, but it is quite clear from what he said to the House, in terms of his strategy, that the receipts from sales of capital assets are not going to be reinvested in the economy. We have argued for a long time that the prudent use of receipts from these asset sales would be investment in the fabric of our infrastructure; for example, in our housing. Far more could be done about the housing problem and the problems of the homeless if some of the receipts from the sales of council houses were used in a housebuilding programme rather than as tax relief for Rachmanism which the Chancellor announced in the context of reforms to the business expansion scheme.

    We also want to see investment in a proper training programme which will enable our work force to be reskilled, and, as indicated by most Opposition speakers, investment in the National Health Service. The Select Committee on Social Services has indicated that a sum of £1·9 billion is needed by the National Health Service to meet its current crisis. I believe that it is increasingly being realised that the proposal that we put forward as a party at the last election for a 2 per cent. real increase in National Health spending showed very sound judgment. That is the sum of money that is needed to meet the ever-growing challenges to the Health Service of people living longer and of modern techniques in medicine which open up the range of opportunities and of services which the NHS can provide. There is no point in having a wealthy nation if we do not also have a healthy nation. Growth in this country and our long-term economic prospects depend to a very important extent on our having a well-educated, healthy nation. To squander oil revenues and receipts from the sales of assets in current expenditure and not invest in our people and our infrastructure is to be very short-sighted indeed.

    The Chancellor identified the advantages which flowed from his reform of corporation tax in 1984, and pointed out how it had stimulated investment, particularly from companies outside the United Kingdom, and brought about a better quality of investment. We very much regret that he did not follow through the logic of that argument and, as his predecessor did in 1982, announce a staged reduction in corporation tax down to the rate that he has now set for the basic rate of income tax. That would have been a further welcome boost to our manufacturing industry.

    It certainly rankles in a constituency such as mine, with a very large number of small business men and small businesses which are unincorporated, that the abolition of capital allowances, which went hand in hand with the reduction of corporation tax some four years ago, brought no benefits to many small business men and self-employed people. I know that the share fishermen in the Scottish fishing industry have made many representations to the Treasury on this and the effect that it has had on industries such as theirs. I hope that in the course of the passage of the Finance Bill further sympathetic consideration will be given to that.

    On the subject of excise duties, I welcome the differential for beer of a lower strength, but I wonder about the Government's commitment to trying to discourage young people from taking to drink when they do not propose to increase the duties on spirits. There are two distilleries in my constituency and in the short term it might be seen as a welcome relief that there has been no increase. But I think that the whisky industry would much prefer a statutory maturing allowance, which, indeed, it has called for on a number of occasions, to a short-term break in the inflation-linked increase of exise duty. After all, people in my constituency who are dependent on cars might wonder why they have got to pay more for their petrol, above the rate of inflation, while those who drink whisky and gin are going to get off scot-free, if not Scotch-free.

    Generally, we welcome the reforms which have been announced with regard to the taxation of married couples, but the detail of those proposals will merit close examination. The allowances which are being given to both husband and wife in terms of capital gains tax provide yet another example of the way that this Budget is very much slanted towards the rich — the haves —rather than to the have-nots. The principle of equal treatment is one that we would accept, but we shall wish to pay serious attention to the small detail.

    I know that many other hon. Members want to speak, so I will not go into any further details. Generally, I think that the impact and overall impression of this Budget will be that the Chancellor has missed an opportunity. He has looked at the short term and given to those who have; he has not looked to the long-term interest of building up the education, health and infrastructure of our country and, in particular, the need to pay attention to those most in need.

    6.36 pm

    I am sure that I am not alone in feeling very sorry indeed that this debate, which is not a very long one, has been shortened by over half an hour owing to two completely unnecessary Divisions and because of a disgraceful scene which led to the sitting being suspended. I feel that I am not alone in believing that that scene was very damaging indeed to the House. I am only grateful that we did not have television cameras here, because what would the British public think of us?

    I always look forward to my right hon. Friend the Chancellor's speech because he is a professional, and he enjoys his professionalism. He has played a vital part in the success of the Government in setting the scene for the policies which have created widespread prosperity among all classes. Also, we owe a great deal to him for our triumph in the last general election.

    I thought that the Budget was ably thought out and most ably presented. It was, as I expected it to be, both reformist and prudent. What a long time it seems now since we had that long series of doleful Labour Budgets in the 1970s. The tide was turned by the stern Budget of the Conservative Government in 1981, which started to squeeze out inflation from the system. From that time, progress has been steady and all kinds of severe difficulties have been overcome: for instance, the cost of the Falklands war, the expense of the very long coal strike and the loss of revenue through the collapse of oil prices. Public expenditure has been contained and people's energies are being harnessed for the good of the country.

    There is, I know, a cry from the do-gooders—and I hear it also in the General Synod of the Church of England—that more taxpayers' money is the answer to almost every problem in this country. In fact, experience shows that far too much taxpayers' money has been spent in the past in, for instance, propping up dud companies, trying to force companies away from their natural places of business to places where they do not want to go, and all kinds of rather spurious public works.

    The intellectual progressives have a puritanical attitude to reductions in taxation. They believe that the state should think for us. I believe that the individual should think for himself. He is the best person to decide what to do with his own money, some of which the Chancellor has given back to him. He can decide whether to spend the money, whether to save it or whether to give it away. How glad we all are that so much more is being given to charity.

    Certainly my constituents in the industrial heart of England will be pleased with the Budget, because, contrary to many Opposition Members, I am glad to say that many of those skilled men and women are in work and will be very pleased to be paying less tax this summer and to be getting more of what they earn.

    No; time is short.

    In the bad times, when factory after factory was closing in my constituency, and the situation was worse than it was in Scotland and elsewhere, people never complained, and now they do not like industrialists and the CBI constantly moaning. They have never held out a begging bowl and they have never expected a handout. They picked themselves up, and paid more attention to marketing and sales. They greatly improved the performance of their companies and many new businesses were started. My constituency is now enjoying prosperity which the people have richly deserved. Confidence is returning, not only in my constituency, but throughout the west midlands. The amount of export trade, particularly for small companies, is staggering. I wish only that that good news would get into newspapers, in particular the local newspapers.

    However, I am still not satisfied that enough financial help is being given to those who start up new businesses, either in the form of grants or loans from the Government, or through loans from the banks. When I visit new businesses, I find that all too often the criteria for loans seem not to fit many individual cases. It is curious that the banks should be so prodigal in lending to the Third world where they have lost billions of pounds, yet so Scrooge-like in lending to English companies where the risk is obviously very much less.

    The cuts in personal taxation at all levels are bold and sensible. Contrary to what some Opposition Members say, they will encourage good, hard-working people to work even harder. I certainly do not object to the new arrangements for the curtailment of perks. The main benefits to a person in work should be in his earnings, which should be taxed at the lowest rate possible.

    I very much welcome the long overdue improvement for married women.

    I accept the increases in taxation on cigarettes, but I am sorry that tax has been placed on petrol and not on whisky and gin, and I hope that the Chancellor will think again about that.

    The country is now starting to believe in its own success and the success of Government policies. In Britain, we have such brains and such ability that there is nothing that we cannot do if we turn our minds to it. Foreigners look with envy to our economy and to our Prime Minister. The only small cloud on the horizon is the amount of money and credit which perhaps is slopping about a bit too much in the economy, and whether the present rate of growth can be sustained. I hope that it can.

    I believe that the situation can be contained if the Government maintain the strictest control on the supply of money, and if industry can increase productivity, control wage costs, and, above all, can manufacture more of the products which are still flooding in from countries such as Germany and Japan. However, this is a problem of success and not of failure.

    In freeing individuals from the burden of too high taxation, we must not forget the public enterprises which are still in the hands of the state, such as the railways, the coal industry and the National Health Service, about which we have heard so much. I believe that to run those services more efficiently does not necessarily mean, as the Opposition say every day, spending more money. It means better leadership, organisation and management, and, above all, the recruitment of higher calibre men and women. Many of our towns are still dirty, filthy and untidy and surely public works should be carried out by voluntary and by state-controlled labour.

    Unfortunately, there is still great waste in several Government Departments and inefficiency in some public services. The Public Accounts Committee, a Select Committee of which I wholeheartedly approve, does a marvelous job in exposing such waste. I suspect the Ministry of Defence's buying policies. As the House is aware, I wholeheartedly support Her Majesty's forces, but the size of the Ministry of Defence and some of its actions, particularly on the commercial side, worry me, and I believe that they leave a lot to be desired.

    The country has had so many years of economic failure in the past that we cannot get used to success. Industry must now take off and put the years of defeatism behind it. The answer to exporting depends not so much on the level of the pound sterling but on the research, development, design, production, marketing and sales of the products which customers want to buy. The unions have still to be weaned away from expecting automatic wage increases every year, and must look more to wage levels tied to productivity, which I know the Government are trying to encourage. Above all, there is a vital need for more training in industry and commerce. We have to worry about the flesh and blood, as much as money and fiscal assets. We must worry in the Budget about ordinary Britons, and we must get better value for money from the colossal amount of public expenditure.

    The Government's enemies say that the Government are producing a greedy society. I believe that they are not. They are trying to create a more responsible society in which the head of the family will look to himself to look after his family and not, as in the years of the welfare state, to the state. Last year, during the cold weather, we heard about old people who were suffering. I should like to know what their families were doing. We hear about crime being committed by young people. What are their families doing? The state is not the answer to everything. It is often very harmful—[Interruption.] Before I was interrupted by my hon. Friend the Member for Mid-Norfolk (Mr. Ryder), I was about to say, and I am sure that the Whips will agree, that responsibility is the essence of what the Government are doing. Thank goodness the years when people's initiative and conscientiousness were warped by the welfare state are now over. I believe that, as a result of the Budget, we are making a healthier and more responsible society.

    6.49 pm

    The late Mr. J. H. Thomas, or Jimmy Thomas as he was more popularly known, was a famous, but rather notorious, son of Newport who, back in 1936, was hounded out of public life, allegedly for leaking Budget secrets. Then there was the late Hugh Dalton, Chancellor of the Exchequer in the post-war Labour Government, who in 1948 was forced to resign because a casual conversation with a journalist immediately before the delivery of his Budget might, it was supposed, have sparked off certain developments on the stock market.

    In those days, not only did the Chancellor go into purdah for weeks before his Budget, but there was very little official speculation about the contents of the Budget. Today, things have very much changed, and the process has accelerated during the period of the office of the present Chancellor. For weeks we have been regaled with tales of the vast surplus held by the Chancellor, and the suggestion has repeatedly been made that he intended to dispose of a good deal of it through tax cuts. Much of the speculation would seem to have been officially inspired, a sort of exercise in kite-flying, to see what the reaction of the public would be.

    What we all realise now, however, is that this is essentially an unusual Budget, which is not so much about raising taxation as about distributing several billion pounds. Windfall increases have, of course, accrued to the Chancellor: more value added tax than expected, due to increased consumer spending; £2·5 billion more than expected in North sea oil revenues; and the rake-off from the sale of the family silver, which has continued.

    The present state of affairs does not point to a healthy economy. We are living in what I would describe essentially as a "candy floss society", for the Government are failing to tackle the real problems that are building up for the future. Superficiality and window dressing seem to be the operative words. For example, in 1979 our manufacturing surplus was £5 billion, but by 1987 we had a deficit of £8 billion. Even when we take into consideration invisible earnings from the City and from tourism, we are left with a £1,679 million deficit on the balance of payments for 1987.

    The Chancellor has announced an increase in the tax on petrol. For a start, this will put up the price of just about everything. It would be far better to increase the taxation on spirits. Then there are the cuts in personal taxation, with the basic rate down to 25 per cent. and the top rate reduced to 40 per cent. This latter proposal is simply a disgrace, and this afternoon Opposition Members spontaneously displayed their indignation. Their reaction was perfectly understandable.

    With concessions to higher rate taxpayers—and we must remember that the south-east already has the highest spending power — it is people living there who will receive the lion's share of these new handouts. It is another example of the creation of inequality, not only between the south-east and the other regions, but between the haves and the have nots. It is another instance of what Robbie Burns would have described as
    "Man's inhumanity to man, making countless thousands mourn!"
    Cuts in income tax will also mean more consumer spending. I do not wish to be a killjoy, but we must face the fact that a good deal more will be spent on foreign imports, and this is bound to aggravate our deteriorating balance of payments deficit.

    Much of the surplus should have been spent on rebuilding British industry. The north-south divide is getting worse. Areas such as Scotland, the north of England and Wales urgently need help to provide the jobs of which they are so desperately short. The amount spent on regional aid, far from being drastically cut, should have been increased to encourage new businesses and new industries to move into those areas to try to iron out the differences between the regions. Tourism is important, but an economy cannot be securely based on service industries. Historic castles linked to Coca-Cola and hamburgers are just not good enough. We need to increase our manufacturing industry by stimulating investment and growth.

    Our education system has deteriorated in recent years and is badly under-funded. Teachers' morale is at an all-time low. It is wrong that our children should be penalised by these cuts, for the future is with the young. Our education system should be properly funded.

    Perhaps the greatest scandal of all is the rundown of the National Health Service. I support the contention that the health of the people is the highest law. There have been protests all over the country, and in Wales even Her Majesty The Queen Mother felt impelled to intervene over a ward closure in Merthyr Tydfil. A fortnight ago the Conservative-dominated Select Committee on Social Services recommended an extra £1 billion for the National Health Service. The ink was hardly dry on the report before it was rejected by the Government. Since then the Committee has accused the Prime Minister of appearing to misrepresent its recommendations. What a way for a Government to treat their own Back Benchers.

    The three presidents of the royal medical colleges have told us that, despite the efforts of doctors, nurses and other hospital staff, patient care is deteriorating and acute hospital services have reached breaking point, but instead of tackling these fundamental problems the Government have been engaged in an exercise in deception. Figures in the White Paper on public expenditure purport to show dramatic increases in spending on hospitals, with current spending up by 26 per cent., it is suggested, since 1982. However, adjustment of the figures to reflect the rise in National Health Service pay and prices shows the increase to be only 0·6 per cent.

    The basic question needs to he asked: why all this skimping and saving on essential public services which is so detrimental to the interests of millions of people? The massive accumulated surplus should have been spent on providing the services that people are crying out for. The Chancellor had a clear choice. He could, for example, have supported the National Health Service, reopened wards and provided for the nurses and the low-paid ancillary workers, besides providing better care for the elderly. All the opinion polls have indicated that this is the wish of the majority. Instead, he has opted to give handouts to the better off. This measure, together with the new social security regulations, will mean that the poor are poorer and the rich richer. In that sense, the Chancellor has failed the nation. When people come to consider more soberly what he has said today, they will realise that what they voted for at the last general election is highly detrimental to their own long-term interests.

    Royal Assent

    I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

  • 1. Consolidated Fund Act 1988
  • 2. Land Registration Act 1988
  • 3. Norfolk and Suffolk Broads Act 1988
  • 4. Welsh Development Agency Act 1988
  • 5. Social Security Act 1988
  • 6. Keble College Oxford Act 1988
  • 7. Selwyn College Cambridge Act 1988
  • 8. Whitchurch Bridge Act 1988
  • 9. Hastings Borough Council Act 1988
  • 10. City of Westminster Act 1988
  • 11. Liverpool Exchange Act 1988
  • 12. Corn Exchange Act 1988
  • British Railways (London) Bill

    Order for Third Reading read.

    7 pm

    I beg to move, That the Bill be now read the Third time.

    Hon. Members will be aware that we had a very full Second Reading debate on 20 January, since when I am glad to report that considerable progress has been made. First, British Rail has reached agreement with the three remaining petitioners, and as a result the Bill was examined upstairs by an Unopposed Private Bill Committee. The Bill started in the other place. I hope very much that the House will give it a Third Reading so that it may go on to the statute book.

    The House will remember that this small but very important measure provides for works on British Railways new Thames link route, which will join the rail networks of north and south London, through the City. The Bill comprises three different sets of works. The first is the realignment of the railway between Blackfriars and Farringdon, which will also involve closing Holborn Viaduct station, at the end of a short spur. There will he a new St. Paul's station on the through line. The realignment includes the creation of a shallow tunnel instead of the viaduct and bridge. Hon. Members will know that the existing bridge near Ludgate circus blocks the great prospect of St. Paul's cathedral from Ludgate circus, and indeed from the east end of Fleet street.

    I am also glad to report to the House that, since Second Reading, the Corporation of London has given planning permission for the redevelopment proposals on the old Holborn Viaduct site, which will pay for these works entirely. The latest estimate of the cost for Work No. 1 of the Bill is about £46·5 million.

    The second section of works involves the reinstatement of tracks and equipment in two short abandoned tunnels that are just to the north of King's Cross station, thus connecting the Thames link with the east coast main line. That part of the works will cost £3 million. British Rail believes that the cost can be justified because of the increase in passenger receipts.

    The third section of works detailed in the Bill—

    Before my hon. Friend leaves Works Nos. 3A and 3B, which he is about to do, will he deal with one of the difficulties that was revealed on Second Reading—that the connections that would allow through trains to operate from the south would allow them to go only as far north as Stevenage, Royston, Cambridge or Peterborough, but no further? I hope that my hon. Friend will bear in mind that we are talking of a yuppie Bill and yuppie works for London commuters, rather than of through connections that hon. Members would like between the south-east and the north.

    Order. I am sure that the hon. Member for Chipping Barnet (Mr. Chapman), when replying, will remember that we are on Third Reading of the Bill, and that remarks must be directly related to the content of the Bill.

    I am grateful, Mr. Deputy Speaker, for that reminder. I shall try to answer my hon. Friend within the provisions of the Bill.

    The reason why InterCity trains cannot go directly from Darlington, to choose just one place that comes readily to mind, to Brighton, to pick another place out of the air, is that tunnels are not high enough to permit the large InterCity carriages arid engines to use them. Although the tunnels have the standard 4 ft 84½ in gauge, the tunnel routes are 18 in lower than usual. Therefore, only the shorter carriages, which are like underground trains, can be used.

    It may be a disgrace, but I must say to my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) that it would cost about £100 million to alter the tunnels to provide for an InterCity through connection. The scheme would then fall. I hope that that deals with the problem.

    My hon. Friend the Member for Darlington (Mr. Fallon) raised a separate point relating to long-distance trains from the north to the south. The reason why trains will not go further than Peterborough is that the carriages would not be economic to run when carrying fast services further towards the north-east. I hope that I have dealt with my hon. Friend's query.

    I see, Mr. Deputy Speaker, that my answer does not satisfy my hon. Friend, so I shall give way to him, and try to explain it again later.

    I am grateful to my hon. Friend for giving way. As I understand it, he is explaining the limitations of clause 10(1) and the definition of the bore. As I understand the Bill's promoters, the bore is 18 in narrower than is necessary to allow for the movement of trains from the north to the south, or the south to the north. Is that the position?

    Order. I am sorry to interrupt the hon. Member again, but as the tunnel is in London, it is not really relevant to deal with the point raised by the hon. Member for Darlington (Mr. Fallon).

    Order. I remind the House that we are dealing with Third Reading. I recognise that there are links in the Bill, in relation to the hon. Gentleman's question, but it is not in order to have such a wide-ranging debate as on Second Reading.

    On a point of order, Mr. Deputy Speaker. We all respect your rulings, of course, and we will adhere to them. The only matter that I would point out to you, with great respect, is that, as the tunnel will be built to a certain size, as my hon. Friend the Member for Darlington (Mr. Fallon) has said, the size of the tunnels is surely relevant to our discussions about the size of the rolling stock passing through them. As the size of that rolling stock has implications for the routes that the trains will take in future, surely it is relevant for us to discuss the routing of those trains, insofar as that is affected by the width of tunnels through which they pass.

    We must not spill over our debate to the north of England, or anywhere else. I am sure that the hon. Member for Chipping Barnet (Mr. Chapman), who has moved the Third Reading, well understands that.

    Order. I think it would be very much better if the hon. Gentleman were allowed to proceed with his speech. I will listen carefully to him, and I am sure he will not stray out of order.

    Within the provisions of the Bill, I say to my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) that it is a question not of building new tunnels but of reopening the existing tunnels. Those tunnels are built to a certain size, and that size will not take the InterCity carriages.

    The third major section of works is to provide escalator sections at King's Cross, affording direct pedestrian access for people using the new Thames link service, connecting them conveniently to the main line station and the three LRT underground lines of Victoria, Piccadilly and Northern at King's Cross.

    Can my hon. Friend confirm that the new escalator connections which are to be constructed as a result of the Bill will have stricter protection in case of fire?

    My hon. Friend raises a vital point. He would have heard the full explanation given in the Second Reading debate. The new escalator connections will be supplementary to the existing ones at King's Cross, which were the subject of that terrible and tragic conflagration last November, but they will not be constructed until the report of Mr. Desmond Fennell QC, who is inquiring into the King' Cross disaster, is published. The new escalators will incorporate any recommendations made by him and will be constructed to the highest possible safety standards. Access and egress in the area will be made easier as there will be more escalators, which will be to the highest safety standards.

    That part of the project is estimated, on the latest figures, to cost some £3·75 million, and the principal works will be financed entirely through the receipts from the development of the Holborn Viaduct station site, which will become obsolete. The provisions of the Bill represent great improvements to the public transport system in that part of London. The improvements will benefit Londoners using the public transport system, as well as people moving from north to south and vice versa. The principal works will be of no cost to the taxpayer.

    I commend the Bill to the House. If points are raised which I can answer, I shall seek, Mr. Deputy Speaker, to catch your eye at an appropriate time in the debate.

    On a point of order, Mr. Deputy Speaker. I did not want to interrupt my hon. Friend the Member for Chipping Barnet (Mr. Chapman), but I would like clarification of the ruling you gave. As I understand it, you have confined the debate to the application of the tunnels to London. Whilst the tunnels are in London, they are being rebored for the purpose of traffic to and from London, which originates and terminates well outside London. There may be debate as to how far outside London that traffic should be facilitated, but, as I understand your ruling, you wish to confine the debate to London traffic, which places us in some difficulty.

    It would be easier if we were to get on with the debate. I am reminding the House that on Third Reading we can debate only what is in the Bill. I realise that whether tunnels can take traffic from the north-east is relevant, but on Third Reading we cannot have the wide-ranging debate that I remember we had on Second Reading, which was then in order. The Bill is somewhat complicated and it is difficult to control what is in order, but it would be better if we proceeded with the debate. I shall listen carefully, and I feel sure that all hon. Members will co-operate by keeping in order.

    7.14 pm

    I will, of course, abide by your helpful ruling, Mr. Deputy Speaker, but the House would like to have further details on one or two questions which relate directly to the Bill and which were discussed in Committee. I am sure that the hon. Member for Chipping Barnet (Mr. Chapman) will be as helpful on Third Reading as he was on Second Reading in trying to answer the questions. I should then like to turn to the implications of the new, redeveloped terminal at King's Cross on services at the station.

    The hon. Member said that the Corporation of London has taken decisions on some of the proposals for redevelopment of the area around the station. I may have misheard him, but I thought he related those decisions to the financial implications of the redevelopment. Perhaps, in winding up, he will confirm whether attempts have been made to consult the planning department of Camden borough council, which I think is the relevant planning authority, and the London Regional Passenger Committee, which has a locus in the argument.

    On Second Reading, some hon. Members referred to the wider implications of the private legislation getting round some of the planning procedures and strict planning requirements. Perhaps the hon. Member could deal with that question and my previous question together.

    On Second Reading we were told of a time scale of two to three years. I ask the hon. Member to confirm that time scale, because on Second Reading he was labouring under some difficulty, but I am sure that he would have taken advantage of the time between Second Reading and Third Reading to get more detail from the British Railways Board.

    The hon. Member has substantially assuaged some of the doubts raised about the Fennell inquiry, but I ask him to confirm that neither British Rail nor anyone else will be required to come up with amending legislation if the inquiry were to make drastic recommendations about the escalators. Are there any circumstances where it would be necessary to introduce amending legislation or additional private powers? The House would be concerned if that were the case. I understand from what the hon. Member said that there are no circumstances in which British Rail would be required to make amendments as a result of the inquiry, but it is important for us to hear what British Rail has to say about that.

    The estimated cost of widening the tunnels was said by the hon. Member to be £1 million, which is a substantial sum. If that figure is correct, it would probably rule out the prospect of a direct link, for commercial reasons. Has the hon. Member gone into that in any detail? Neither he nor I have any economic expertise in costing railways, so for him to give a figure of £1 million is a little bit casual. I should like to know how that figure was made up and satisfy myself that someone has not simply worked it out on the back of a fag packet.

    The question whether that £100 million is the right figure should sit cheek by jowl with an analysis of the cost benefits that would accrue, if the line was capable of taking wider gauge traffic. From my experience of using London and making frequent journeys through King's Cross, I have concluded that there would be a substantial benefit. I would take every opportunity to go round London, if I could avoid King's Cross, and I am sure that that would apply to many people travelling from the north.

    I wonder whether British Rail has undertaken any survey to see what traffic would be generated by, and the additional benefit that would accrue from, wider tunnels, even if the proposal cost a substantial sum of money. If the Bill receives its Third Reading, I assume that British Rail will consider co-ordinating timetables so that trains which can go through the Thames link will be used and people will be encouraged to use the link. I understand that there are now no outstanding petitioners. That is a substantial improvement on Second Reading.

    There has been some controversy about some of the redevelopment schemes envisaged in the works covered by the Bill. That is a constituency matter, and I do not wish to interfere in it. The hon. Member for Holborn and St. Pancras (Mr. Dobson), who represents the constituency concerned and is quite rightly in his place, can make his own arguments. However, the scale of the developments also makes this an important national issue, and I hope that the hon. Member for Chipping Barnet will comment on that.

    Many hon. Members have spent a great deal of time on the Bill. My hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) and the hon. Members for East Lothian (Mr. Home Robertson) and for Darlington (Mr. Fallon) have all been assiduous in giving it thorough scrutiny. There has been a substantial change of attitude in the way that British Rail has handled the matter. There is now a much more positive attitude towards considering the worries and fears of hon. Members on both sides of the House and of all parts of the country in respect of the issues underlying the Bill.

    The Bill could have long-lasting repercussions for the scale and nature of the services provided on the east coast route from King's Cross. As a result of the alterations in the Bill, after two or three years of rebuilding, new levels of service will be provided. For example, the longer platforms that will result from the redevelopment will allow the use of larger and electrified trains, and services which were due for closure in two months' time may become profitable after redevelopment.

    My fears about the Bill will he substantially assuaged if British Rail makes it clear that the opportunities provided by the Bill will be seized with vigour and enthusiasm. My fears will be assuaged if British Rail discusses with local Members of Parliament and local authorities the opportunities that will arise from the redevelopment of King's Cross. My fears will be assuaged because British Rail now gives me the impression that it will do everything possible to minimise inconvenience to east coast day and night passengers using King's Cross during redevelopment and that it will carry out a detailed study of the possibility of bringing back at least one night service when the King's Cross redevelopment is complete.

    7.24 pm

    The passage of the Bill through the House has shown that it cannot be regarded simply as a London Bill and that debate cannot be restricted to London Members. The financing of the works contained in clause 5 and the purpose of those works can he broadly described as national.

    Let us consider the money required to facilitate the works in clause 5. Rather unusually for such a Bill, the money is being raised through a substantial property development in the heart of London, but it would he wrong to assume that Londoners alone have contributed to the asset sales from which the new resources are to be released. Indeed, the overall subsidy to the London and south-east area of British Rail from the taxpayer is the largest for any British Rail region. When my hon. Friend the Member for Chipping Barnet (Mr. Chapman) says that the figure of £100 million is too expensive, he should bear in mind that the overall subsidy each successive year is about £300 million from the taxpayers of the rest of the country to services and developments in the south-east.

    We all have a financial interest in the Bill, because, as taxpayers, we have all contributed to the development and operation of Holborn Viaduct, whose redevelopment will finance the works in the Bill. For that reason alone, we are entitled to ask whether works Nos. 3A and 3B are sufficient for the national interest in linking up the respective regions.

    It may be helpful if I intervene now to deal with that point. I shall obtain justification for the figure of £100 million, which would be the cost of redesigning and rebuilding the tunnels and the bends and curves of the line to accommodate InterCity trains. My hon. Friend may have a point when he says that the additional money should be spent if it would provide a through link from the north to the Channel tunnel, but that can, and no doubt will, be provided by using the existing lines via Olympia to the west of London, rather than through the City. I hope that my hon. Friend is satisfied on that point.

    Order. We must deal with the link in the Bill. The hon. Member for Darlington (Mr. Fallon) is in order at present, but a slight temptation was opening up that he might widen the debate to include another link which is not in the Bill.

    I was going to make the point that we can examine only this link and not any proposed future link that might be part of the arrangements for the Channel tunnel.

    The Bill does something unique, as it links up two parts of the network. We are entitled to ask whether it does so satisfactorily, bearing in mind British Rail's national obligations laid down by statute.

    Before giving the Bill a Third Reading we have to ask my hon. Friend the Member for Chipping Barnet whether the promoters are justified in constructing a link in such a restrictive way. We have to ask whether, for the sake of l8in, the tunnel is being rebored and reopened in a way that limits the passage of traffic through it to certain parts of the rail network and to passengers from certain parts of the United Kingdom. I submit to my hon. Friends that we would be unwise to give a Third Reading to such a restrictive Bill at the first opportunity presented to us to link the southern, midlands and northern networks of British Rail.

    If my hon. Friend the Member for Chipping Barnet can satisfy us on that point, if he can reassure those of us who are concerned to ensure that the new opportunities opened up by the development of the cross-Channel link, which we cannot discuss tonight, will be fully taken into account in all parts of the United Kingdom, and if he can show that the costs involved in satisfying us far outweigh any benefit to be gained to the midlands and the north, we shall all be much keener to get the Bill on to the statute book and proceed with the next business before us.

    7.31 pm

    To myself and my constituents, many of whom live in the immediate environs of King's Cross, the proposals in the Bill are relatively unobjectionable. The reopening of the two tunnels that curve round either side of King's Cross station underground, the putting-through of new traffic to carry the Thames link services that will link places such as Bedford and Peterborough to the south of the river with no additional disruption of the surface, the construction of new subway links between the London Midland rail station, the underground and the main line stations at King's Cross are benefits. Therefore, we must give a cautious welcome to them. However, as hon. Members have already said, they are severely limited benefits.

    The height of the existing two tunnels around King's Cross and the slope of the curve mean that it will be possible only for trains of a limited size and capacity to travel along the newly reopened lines. That is something about which my colleagues from the north-east and Scotland will undoubtedly wish to express considerable regret. The benefit of reopening the tunnels will be limited by those factors.

    Having said all that, it is important to say that if the Bill were coming before us without anything else happening at King's Cross, it would be a welcome exercise. However, that is not the case. Only three weeks ago, after this Bill received its Second Reading and shortly before it was considered in Committee, the British Railways Board announced the public consultation exercise, which is now under way, in connection with major and dramatic redevelopment to the north of King's Cross and St. Pancras stations. Those redevelopments throw this Bill into a completely new light. I believe that it is important for us to ask some questions as the result of that announcement.

    Part of the redevelopment packages to the north of King's Cross, which are being put before the public for potential selection as the consultation exercise proceeds, is the construction of what is called in the press handout of British Rail, a major new international railway terminus underground at King's Cross. The construction of an international terminus at King's Cross must entail the construction of new tunnels to carry InterCity traffic from King's Cross and areas to the north of London through to areas to the south of London and, potentially, through to the Channel tunnel.

    I mention that simply because proposals of that sort, which form part of the consultation exercise that British Rail is currently undertaking for land and railway redevelopment around King's Cross, are completely incompatible with the measures proposed in the Bill. If major redevelopment takes place with a new international terminus at King's Cross and InterCity traffic travelling from the Channel tunnel to the north of London via new tunnels in the King's Cross area, the work to reopen the two tunnels in this Bill cannot possibly be cost-effective. Indeed, the line of new tunnels is likely to cross the line of the tunnels that are proposed to be reopened by the Bill. Therefore, the current major redevelopment proposals for the King's Cross area throw the provisions of this Bill into a new light.

    The time scale is a long one. It may be up to 10 years before the line to the north of King's Cross is fully redeveloped. However, we are entitled to ask which of two things will happen in the event of that major redevelopment going ahead. Will all the work to reopen the two tunnels around King's Cross be instituted but only for a short time, and then be replaced by much more major development work? If that is to happen, we are entitled to ask whether British Rail will get value for money.

    Alternatively, will the proposals never get off the starting block? Will we find that, we having passed the Bill, British Rail will decide in six months or a year, when it decides on the basic principles of its major redevelopment exercise, that it does not want to go ahead with the works in this Bill? If so, why is British Rail wasting valuable parliamentary time in bringing this Bill before us? I believe that important questions such as that need to be asked as a result of the new position that has been created by British Rail's recent announcements.

    My constituents have expressed some concern about the impact of this Bill in the light of their general concern about the future of the King's Cross area as a whole. I do not want to trespass on the rules of debate, but I should like to put down four markers on issues which trouble my constituents and which I believe, in the context of the general redevelopment of King's Cross, British Rail ought to take on board.

    First, if any new international underground terminus is to be contemplated, there should be the minimum disruption to the surface. Many homes and businesses are thriving in the immediate hinterland of King's Cross, especially along York road and Caledonian road, in my constituency. It is important that people's livelihoods and homes are not disrupted or destroyed.

    Secondly, the impact of traffic coming to any new development at King's Cross and to the north of King's Cross will weigh heavily on the residents of Islington, rather than on those of Camden, although any such development will be situated principally in Camden. The flow of traffic must be watched carefully.

    Thirdly, because any such development will be located in Camden, it is principally the people of Camden who are likely to benefit from any planning gain from such a development. I put British Rail on notice that I shall be looking for gains for the people of Islington as well.

    Fourthly, the consultation exercises that are being undertaken at present by British Rail and by its prospective developers concentrate on consultation with the people of Camden. Again, I put British Rail on notice that it must include in its consultation exercises the people of Islington as they will be affected almost as much as the people of Camden.

    I mention those four issues because they are of considerable concern to my constituents. As I have said, the basic provisions of this relatively minor Bill are of themselves fairly unobjectionable. However, in the context of British Rail's proposals for overall development at King's Cross, and the prospect that much more major work might be envisaged at, around or underneath King's, Cross, and with the prospect of further private Bills relating to such matters coming forward in the next year or the next year and a half, we are entitled to ask British Rail what precisely it is up to, and how this Bill meshes in with its overall and further proposals for much more widespread developments at King's Cross, which will have a much greater impact on my constituents and those of many of my colleagues.

    7.42 pm

    I rise to speak briefly to give the official Opposition view of the Bill. I am not attempting to wind up the debate in any way, so I hope that the Under-Secretary of State for Transport, the Minister with responsibility for roads and traffic, will not think that I am seeking to pre-empt the spot that he seeks to occupy.

    I should like to put two points about the Bill to the representative of the promoter, the hon. Member for Chipping Barnet (Mr. Chapman), and to the Minister. My first point has not been raised so far. It refers to clause 9 in part II. It arises as a result of representations made by the London Cycling Campaign to one of its more famous cyclists, the hon. Member for Ealing, Acton (Sir G. Young) who—

    The hon. Member for Acton is perhaps not quite as famous as the right hon. Gentleman, but he is a well-known cyclist and, for obviously understandable reasons, he cannot be here to put these points tonight. I am asked to advise the hon. Member for Chipping Barnet, who represents the promoters, that the London Cycling Campaign has expressed concern about the closure of Pilgrim and Apothecary streets and their replacement by footpaths. The campaign makes the point:

    "Cyclists cannot legally use a footpath. If these two roads are cut off to cyclists use, there will be no east to west route between Ludgate Hill and Queen Victoria Street".
    The campaign then makes the point that Queen Victoria street has fast-moving traffic and is perceived as dangerous.

    The campaign makes two suggestions arising from the difficulties that cyclists would encounter as a result of the Bill. It suggests that the two footpaths to which I have referred should be for "shared use" by pedestrians and cyclists, with a minimum laid-down width and segregation between the two users. The campaign also suggests—the Minister will be aware of this—that the policy of the former Greater London council, now adopted by the boroughs, is that where road closures are proposed, there should be an exemption for cyclists, unless there are overwhelming reasons against that. Shared footpaths are not that unusual and are neither expensive nor dangerous. There are at least two other such schemes in London at present, in which such sharing works successfully.

    I should like to put another point to the Minister and the hon. Member for Chipping Barnet, relating to the vexed question, if I might so refer to it, of Works Nos. 3A and 3B. We understand the ire of the hon. Member for Darlington (Mr. Fallon), who is not in his place at the moment, but who intervened a couple of times during the speech of his hon. Friend the Member for Chipping Barnet.

    Without rehearsing the arguments, and possibly provoking your ire, Madam Deputy Speaker, by straying outside the terms of the Third Reading, it appears strange, to say the least, that we should be discussing these works at the same time as British Rail is talking about the complete redevelopment of King's Cross and St. Pancras stations. Indeed, my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) has referred to that. My hon. Friend asked, "Exactly what is British Rail up to?" If the hon. Member for Chipping Barnet can answer that, good luck to him, because he will surprise us all. British Rail frequently gives the impression that the left hand is not only unaware of what the right hand is doing, but, if it found out, it would object anyway.

    The contradiction in terms that arises from the proposals relating to Works Nos. 3A and 3B and the reality of the development at those two main line stations is pretty obvious. As my hon. Friend the Member for Islington, South and Finsbury said, even if the Bill receives its Third Reading tonight we are not ensuring that the works can go ahead. British Rail often seeks permission for such works but does not proceed with them for a considerable time. For perfectly understandable constituency reasons, my hon. Friend and those of us who take an interest in railway matters generally are entitled to ask exactly what British Rail is up to.

    I have here a statement on behalf of the promoters referring specifically to Works Nos. 3A and 3B, which states:
    "Works 3a and 3b would not be physically compatible with any realigned route capable of taking InterCity trains. If it were subsequently decided to proceed with an InterCity route, works 3a and 3b would not be undertaken, unless the costs could be recovered before the larger scheme were implemented."
    My hon. Friend the Member for Islington, South and Finsbury is entitled to ask questions about British Rail's intentions. Understandably, if there is to be widespread dislocation in and around his constituency, to no apparent purpose, he is entitled to ask some straight questions of the hon. Member for Chipping Barnet, who represents the promoters of the Bill. However, I readily repeat that if the hon. Gentleman is unable to provide answers to those questions, I for one will well understand.

    Returning to the vexed question raised by the hon. Member for Darlington of why original Works Nos. 3A and 3B are suitable only for suburban trains rather than for InterCity trains, and without rehearsing once again their various destinations, it is true that there is nothing to stop an electrical multiple unit train from travelling as far as is necessary, once the east coast main line is electrified; indeed all the way to Edinburgh if so desired. I hope that the hon. Member for Chipping Barnet will agree.

    I do not believe that the most comfortable way of making the journey to Edinburgh would be from somewhere south of the river, whether from Blackfriars, St. Paul's or even further south. However, I do not believe that British Rail's financial policy would stop such a journey from being embarked upon. Nobody knows what its financial policy is, least of all British Rail's management. What would stop it would be the uncomfortable nature of the journey, given the fact that suburban trains, as their name implies, are built merely for short, suburban journeys.

    The difficulty in which the BR management finds itself as a result of the statement to which I have just referred is amplified by the difficulties that have arisen over the years with cross-London traffic, north to south London traffic and traffic from the east and west coast main lines to the south of England. There was a perfectly adequate route — albeit sparsely used — through Kensington Olympia. Some time ago BR decided to dispense with that line and considerably reduced facilities at Kensington Olympia station. BR then decided to boost north-south traffic by routing it through that station—albeit that facilities had been reduced. It then realised that the trains that it had provided to run via Olympia were not particularly popular—principally because their average speed was about 40 miles an hour.

    I have sought to amplify the confusion that is found, all too often, in the minds of those who run BR. I confidently predict that if the current management of BR had been responsible for Napoleon's retreat from Moscow, the French army would have been lucky to pass through the outer suburbs of that city.

    7.52 pm

    I had intended to withdraw the insult that I had offered to the hon. Member for West Bromwich, East (Mr. Snape) on Friday during "Any Questions". We had been talking to a wider audience until the line was cut as a result of the hon. Gentleman upsetting someone by something that he said. However, having heard him offer to amplify any confusion that there might be on the part of British Rail, I am not sure whether he has found his true role. When the hon. Gentleman talks about the left hand not knowing what the right hand does, I believe that he is talking about the Labour party rather than British Rail. If anyone wishes to pick up on the remarks that he passed on from the bicycling baronet, I should say that my Department has some extremely good leaflets on the shared use of footpaths by cyclists and pedestrians.

    It may be helpful if, at this point, I briefly restate the Government's view on the Bill. The Government have considered the content of the Bill and have no objection to the powers sought by the British Railways Board. Indeed we support the aims of the Bill. The Bill will enable the board to provide a new modern station on the Thames link line over which, starting later this year, commuter services will run directly between north and south London, for the first time since the first world war. The Department approved the necessary investment for the scheme in December that will enhance the quality of service to the passenger.

    The proposed new station will be funded by redevelopment with the private sector of the Holborn Viaduct site. We are pleased that the board is involving the private sector in this way. I hope that this House will be able to give its support to the Bill to enable the board to carry out this exciting and worthwhile development.

    7.54 pm

    A number of hon. Members from various parts of the country are rather reluctant to see this Bill go through, given the withdrawal of services to and from King's Cross. This matter has been of considerable concern to the north-east of England and the south-east of Scotland. Indeed, BR has announced the withdrawal of overnight services from King's Cross to those areas.

    I recognise that the Bill is relatively narrow, and it is right that my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) should concentrate upon its local impact on his constituency and the surrounding areas. Obviously, a development of this nature has a national significance and I am sure that the promoter of the Bill will not object if hon. Members from further afield contribute to the debate.

    Hon. Members have suggested their reluctance to sanction such developments in the context of the reduction in services to and from the capital through King's Cross. The hon. Member for Chipping Barnet (Mr. Chapman) may be aware that discussions have taken place between BR, a number of my hon. Friends and myself who represent constituencies in the south-east of Scotland and the north-east of England. I was happy when BR issued a public statement stating:
    "passengers will be able to travel via alternative routes at no additional charge with appropriate connectional arrangements … InterCity therefore undertakes to review the situation on the East Coast route and will restore at least one overnight service on that line in 1991".
    The electrification of the east coast main line will be completed in 1991.

    With that understanding, and in the knowledge that my constituents will be able to enjoy the new facilities provided as a result of the Bill, I am happy that it should receive its Third Reading.

    7.55 pm

    I wish to give a hesitant welcome to the Bill. However, as a result of what I heard on Second Reading, what I read in subsequent Committee proceedings and what I have heard today, I believe that it would be better if the Bill were completely withdrawn.

    It is unbelievable to me that the House should be considering the passage of an important Bill, involving the expenditure of a great deal of money, without being able to apply the results of the inquiry into the King's Cross tragedy. On Second Reading, several hon. Members asked my hon. Friend the Member for Chipping Barnet (Mr. Chapman) about that. He said that nothing would be undertaken until the King's Cross inquiry had reported. Tonight, when I rather rudely interrupted when he was speaking, he said that the findings of that inquiry will be incorporated in the Bill.

    The King's Cross tragedy was a major event, but the Bill was framed and finalised—down to crossing the last "t" and dotting the last "i"—long before that fire. It is inconceivable to me that it can go through without major surgery. In view of the significance of the works that are being included in the Bill, I believe that the best thing to do is to scrap it until the inquiry has reported. Indeed, I believe that its findings are bound to be most significant to any railway operator and that those findings should be incorporated in this measure.

    Perhaps this is a vain hope, but I might be able to avoid the confusion between my hon. Friend and myself. First, I hope that I am correct in saying that the undertaking that I gave on Second Reading was that the escalators would not be constructed until any recommendations made by Mr. Desmond Fennell, as a result of his inquiries, were made known to BR. That commitment stands. Whatever Mr. Fennell recommends will be taken on board—if I may use that phrase—by BR.

    I believe that only Works No. 4 in the Bill, the escalator connection at King's Cross, has any relevance to the inquiry. However, if Mr. Fennell makes more wide-ranging recommendations about approaches to overground and underground stations and so on, presumably they will be incorporated in the new St. Paul's station and any other relevant works. Presumably those recommendations will also be incorporated by any other urban station in the country. Therefore, I hope that my hon. Friend's fears can be allayed on that point.

    My hon. Friend always deals with these matters in a conscientious way, but he has not satisfied me at all. There is far more in the inquiry which is now taking place than the type of escalator used. As my hon. Friend will know, serious questions have been raised about the position of fire-fighting points at King's Cross. They were not concealed, but grave doubts have been expressed about whether they were in the best position.

    Even more significant is the length of the access passage. In Work No. 4 it is 82 m. In that regard, statements made by the London fire brigade about the length of hoses and the abilities of men in smoke-laden atmospheres to travel more than a few yards are significant. I believe that I am right in saying that the passageway at King's Cross where the tragedy took place was considerably less than 82 m. The inquiry may make stringent recommendations on the length of underground or enclosed passageways. It will certainly make special recommendations on the access of fire brigades and firefighting crews, as well as on instructions to make sure that any future fire-fighting points are not only known but centralised, and so on.

    Many other matters are coming out of the King's Cross inquiry which do not affect the Bill so much, such as the training of staff, which will no doubt be acted upon. As I have already said, the inspector may well conclude that sprinklers should be provided. The evidence of senior fire officers who were at the scene shortly afterwards was that, if sprinklers had been provided—

    Order. The subject is the rebuilding of King's Cross. The hon. Gentleman is going into the inquiry. Will he bring himself back to the Bill?

    I was trying to point out that it will be difficult to proceed with the construction in the most effective way. If sprinklers are to be provided, that should be done when the building is being constructed.

    In Work No. 4, there is to be a passageway of 82 m and the provision of escalators is included in the Bill. The King's Cross inquiry should give a ruling on the exact cause of the fire and we should see whether it is possible to incorporate an escalator which does not accumulate litter, is of a certain length, and so on.

    There is a motion on the Order Paper which suggests that the Bill should not be proceeded with until the British Railways Board gives an undertaking to electrify the London midland main line as far as Leicester. Has he received—

    Order. We are not debating that at the moment. The hon. Gentleman is out of order.

    The Bill should be delayed until we have the benefit of the inspector's findings, so that we can proceed with confidence with these works, which otherwise might have to be radically altered as soon as they are constructed.

    On a point of order, Madam Deputy Speaker. Is the motion in the name of my hon. Friend the Member for Harborough (Sir J. Farr) likely to be debated this evening? Some of us are interested in the electrification of the main line, particularly as far as Derby.

    The instruction in the name of the hon. Member for Harborough (Sir J. Farr) has not been selected this evening, but the points raised by the hon. Member for Derby, North (Mr. Knight) earlier will be relevant to our forthcoming debate.

    8.5 pm

    This is an important debate and I want to take up some of the points so skilfully made by my hon. Friend the Member for Darlington (Mr. Fallon). I pay tribute to the careful and assiduous way in which my hon. Friend has studied the Bill. The House will be grateful to him for what he has said this evening. He highlighted what must be apparent not just to London Members of Parliament but to northern Members such as myself.

    I represent the constituency of Gainsborough and Horncastle, in the county of Lincolnshire. Although the Bill concerns London, it is of interest and concern to everybody, whether they represent constituencies in London or Lincolnshire. We are talking about the expenditure of £100 million—a large sum of money—and the House will want to debate the matter in some detail. There is a feeling of vexation and irritation among northern Members about the way in which British Rail is promoting the Bill.

    The Bill will undoubtedly be of benefit. My hon. Friend the Member for Darlington referred to it as the yuppies' Bill. I would not be so disrespectful as to append such a name to it, but there is a feeling among county and northern Members that British Rail is placing too much emphasis on investment in the London region and not enough in the provinces.

    I do not want to stray from the narrow remit that you have set for our debate, Madam Deputy Speaker, by talking about the fact that British Rail has failed to invest anything in Market Rasen station in the past 10 years. Therefore, I shall pass on rapidly to deal with the Bill.

    We have heard about Works Nos. 3A and 3B. I do not claim to be an expert—[Interruption.] I am glad that the hon. Member for West Bromwich, East (Mr. Snape) thinks that I am making a brave attempt to look after the interests of my constituents.

    I was most impressed by the comment of the hon. Member for Islington, South and Finsbury (Mr. Smith) that we may be spending a large sum of money, but for just a little more we might be able to do very much more to make InterCity services truly inter-city, not just, as my hon. Friend the Member for Darlington said, a yuppies' service. I am not convinced by what my hon. Friend the Member for—I cannot think of his constituency—

    Will the works at King's Cross enable those of us who travel on InterCity from Scotland to England to go on the east coast route so that we do not have to go on the west coast route, which is such an inconvenience for those of us who live in the east?

    I ask the hon. Gentleman not to do so, as the intervention was quite out of order.

    As usual, I am impressed by the concern and eloquence of my hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn). I hope that he will forgive me if I do not reply to his interesting point because I wish to remain in order. I am glad to see that my hon. and learned Friend has a copy of the Bill. He may like to look at it in some detail because, like me, he is a lawyer. It is important that Parliament should consider these matters in great detail because to do so is in the public interest.

    If my hon. and learned Friend turns to page 7 of the Bill, he will see provisions relating to a new ticket hall at King's Cross. I appreciate that I am touching on a sensitive area, but there is concern in the nation following the recent tragedy at King's Cross that the utmost consideration should be given to safety.

    Clause 10(11) of the Bill provides:
    "the Board may on any part of the land numbered on the deposited plans 10 in the London borough of Camden construct and maintain a ticket hall at concourse level within the Board's King's Cross station with all necessary works and conveniences connected therewith."
    I hope that when my hon. Friend the Member for Chipping Barnet sums up he will give the House assurances about the ticket hall works.

    The hon. Member for Islington, South and Finsbury made an interesting speech and I tried to make careful notes of what he said. Quite rightly, he spoke about the interests of his constituents. I am glad that my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) has just entered the Chamber because he also takes a great interest in these matters. I am sure that he will want to talk not about Market Rasen station but about the new ticket hall in King's Cross that is mentioned in page 7 of the Bill.

    As the hon. Member for Islington, South and Finsbury said, there is great concern among the residents of Islington that there should be consultation not just for the people of Camden, but for his constituents because they will be affected by these works. We want full consultation. British Rail is nationalised, and I am afraid that the record of nationalised industries on certain matters of consultation is not always what it should be.

    If the hon. Member wishes to intervene, I shall give way. I am sure that the House will welcome his intervention.

    The House would welcome true consultation. I have dealt with the new ticket hall at King's Cross. Clause 10(12) talks about York way. Those of us who have knowledge of the environs of King's Cross will know that York way is a busy thoroughfare. We will want assurances from my hon. Friend the Member for Chipping Barnet that traffic will not be unduly disrupted. While we welcome the British Rail proposals, we want to be reassured that during the course of these works undue irritation or inconvenience will not be caused to the people of London or to the residents of Islington.

    I understand that part of the construction work for the new ticket hall in the King's Cross concourse will involve the relocation of the present exit for royal mail vans going from King's Cross station on to York way. That in itself will mean the relocation of the bus stops alongside King's Cross station in York way. It is a dangerous enough place at the moment, and if the stops are pushed further up York way it is likely to become much more dangerous and less convenient for people who have to wait for buses. I hope that the hon. Gentleman will concern himself not just with the amount of traffic in general on York way, but with the impact on bus passengers interchanging on the rail and underground links at King's Cross, which are also important.

    I am grateful to the hon. Gentleman. He has admirable local knowledge and we all respect him as a good constituency Member. He makes a point that I could not have made as strongly as he has.

    My hon. Friend surprises and disappoints me because, like me, he uses the service into King's Cross. I am horrified at what the hon. Member for Islington, South and Finsbury (Mr. Smith) has just told my hon. Friend, because when I alight from my train at King's Cross I come to the House by means of a 77 or 77A bus and, on average, I have to wait about 20 minutes from the time I get off the train until I get the bus.

    The Bill is not concerned with the number of the red bus that the hon. Gentleman takes.

    On a point of order, Madam Deputy Speaker. The point that I was trying to make is that if what the hon. Member for Islington, South and Finsbury has told us about bus stops happens as a result of the relocation of the ticket office and the exit of the royal mail vans—

    Order I have heard the hon. Gentleman's intervention and it is not at all relevant.

    I think that it will be in order to say that if Work No. 4 on page 7 of the Bill—and I shall stick to what is written there—results in what the hon. Member for Islington, South and Finsbury reports, it will cause inconvenience not just to his constituents but to mine. In that sense my hon. Friend the Member for Brigg and Cleethorpes was right to intervene because those of us who represent northern constituencies have a perfect right to be interested in these matters, because I and my constituents regularly use King's Cross. Incidentally, we are dissatisfied with the possibility that the 125 service may be withdrawn, but I do not want to go into that in any detail. I am sure that the people in British Rail who follow debates such as this will look at that matter.

    I should like to return to the question of the construction of the new ticket hall at King's Cross. The hon. Member for Islington, South and Finsbury spoke about the London Cycling Campaign. That is of concern to the House. Clause 10(14) talks about stoppage. If there is to be a temporary or permanent stoppage—and it is not entirely clear from the Bill whether it will be temporary or permanent—the London Cycling Campaign has a bone fide interest and is right to make its view known to the House. Clause 10(14) provides:
    "The Board during and for the purpose of the execution of the works may temporarily stop up and divert, and interfere with, any road or footpath and may for any reasonable time divert the traffic therefrom."
    The Bill therefore gives considerable powers to British Rail and we should be concerned about that.

    Clause 10(14) goes on to say that the board will
    "prevent all persons other than those bone fide going to or from any land".
    We should ask ourselves what is meant by "bone fide".

    Will British Rail inspectors stop innocent members of the public using public roads and footpaths? The clause says:
    "The Board shall provide reasonable access for persons on foot bone fide going to or from any such land".

    The point with which my hon. Friend should concern himself in clause 14(2) is that it specifically excludes bicycles.

    If the hon. Member for Gainsborough and Horncastle (Mr. Leigh) wishes to enlighten us further, he should encourage a few more interventions so that he can read the Bill before he makes such a fool of himself.

    The hon. Gentleman may think that I am making a fool of myself. I assure him that this is a matter of great importance. If the hon. Gentleman knew what was worrying my constituents, he would know that these matters are of great importance to them. I am determined to make my point, as is my hon. Friend the Member for Brigg and Cleethorpes. We shall do so, and we shall go on doing so, until British Rail realises that investment in the north-east and the north and east midlands is as important as investment in London. We are perfectly entitled to use Parliament to make our point, and we shall do so.

    I am not in the business of making a fool of myself; I am in the business of making British Rail aware of my concern. In my experience, the only way to do that is to speak at some length on Bills such as this. Otherwise, British Rail will steamroller over us, which is not good enough.

    This is no joke. It is a serious matter for my constituents and for me. We are determined that there should be a truly national inter-city service, and we shall fight for that every inch of the way. We shall not be steamrollered by the hon. Member for West Bromwich, East or anyone else.

    Clause 14(4) states:
    "The Board shall not exercise the powers of this section with respect to any road unless they have given not less than 28 days' notice in writing of their intention so to do to … the traffic commissioner".
    It seems that 28 days' notice may not be adequate. I know not. I am not sure whether it is the period normally laid down in Bills of this sort. Perhaps my hon. Friend the Minister can tell us whether it is a normal provision, or whether on occasion more, or fewer, than 28 days are allowed.

    Clause 14(4)(a) mentions
    "the traffic commissioner, constituted for the purposes of the Public Passenger Vehicles Act 1981, in whose area the road is situate".
    We should like to know who is the traffic commissioner, and whether he is aware of all the local problems that might he involved in blocking a road, or not blocking it. These are matters of serious concern, as the hon. Member for Islington, South and Finsbury has made plain.

    Clause 14(5) states:
    "The exercise by the Board of the powers of this section in relation to any road or footpath shall not prejudice or affect the rights of the operator of any telecommunications code system".
    We should like to know exactly what is meant by that. After all, telecommunications are vital to all of us. We should like an assurance that the Bill will not result in any undue interference with such a vital national and local service.

    I do not wish to delay the debate unduly. I want to give my hon. Friend the Member for Brigg and Cleethorpes the chance to speak—to make the same points that I have made—

    The hon. Member for West Bromwich, East is a past master at speaking at some length. I do not claim to have his skill, but I am prepared, if necessary, to do it for the sake of my constituents.

    Clause 15(2) relates to works involving
    "any available stream or watercourse, or any sewer or drain of a relevant authority".
    This will be a matter of some concern to the public, who will want to receive reassurances about flooding and such like. After all, clause 15(2)(a) states:
    "the Board shall not discharge any water into any sewer or drain".
    We should like to know how they can be sure that that will not happen.

    Clause 15(2)(b) provides that
    "the Board shall not make any opening into any such sewer or drain save in accordance with plans approved by, and under the superintendence (if given) of, the relevant authority in whom the sewer or drain shall be vested and approval of those plans by the relevant authority shall not be unreasonably withheld."
    That, in my view, gives draconian powers to the board. In saying that approval of the plans
    "shall not be unreasonably withheld",
    the Bill is really saying that British Rail can do what it likes.

    The clause continues:
    "Section 31 of the Control of Pollution Act 1974 shall apply to, or the consequence of, a discharge under the powers of this section into any relevant waters for the purposes of the said section 31".
    The hon. Member for West Bromwich, East may understand that, but I certainly do not.

    Clause 15(3)(b) provides that
    "the Board shall not damage or interfere with the bed of any watercourse forming part of the main river of the Thames Water Authority or the banks thereof within the meaning of section 116 of the Land Drainage Act 1976".
    We should like an assurance that there would indeed be no such damage. Obviously the matter is of some concern to the people of London.

    Part III of the Bill deals with the purchase of land. Clause 23(1) lays down that
    "the Board may purchase compulsorily and use such of the land delineated on the deposited plans".
    Here again, we are giving considerable powers to the board. We are effectively giving it compulsory purchase powers, which must be a matter of some concern to Parliament. [Interruption.] I shall sit down shortly, but. I am determined to make the point.

    No. I am going through the Bill, and I am in order. I will make my point so that British Rail is aware of the worries of people who live in the provinces.

    On a point of order, Madam Deputy Speaker. Is it in order for an hon. Member who has obviously not read the Bill before coming to the House to keep reading chunks from it, and then to say that either his constituents or Members of the House are concerned that the provisions are abided by? If we all do that, the debate will not get very far.

    Order. That is not a point of order for the Chair. However, I remind the hon. Member for Gainsborough and Horncastle (Mr. Leigh) that we are all capable of reading the Bill, and it is therefore not necessary to quote great chunks of it.

    I shall not quote great chunks of it, Madam Deputy Speaker. I feel that I have made my point.

    I think that my hon. Friend should bear in mind—I am speaking as one who has served on Committees on many private Bills affecting British Rail and the London railways—that deposited plans have an uncanny nack of changing. It is all very well when a deposited plan is put before a Committee, but we often find that it has changed significantly by the time that powers have been given for the enactment of the legislation sought by the promoter. That is why it is so important to beware of the phrase "deposited plans".

    As my hon. Friend says, whatever the present plans may be, we are not sure whether they will change. But I see that I am irritating the hon. Member for West Bromwich, East, so I shall draw my remarks to a close.

    Let me say this to the hon. Gentleman, and to British Rail representatives who are following the Bill. We are talking about a £100 million investment. It may be an excellent investment for the people of London, and I do not wish to hold up the Bill's passage for that reason. Having said that, however, I feel that my constituents will want to know why, although we have asked repeatedly for an assurance that a through-train service to King's Cross will be retained, British Rail has been unable to give that assurance. Why is it necessary for provincial Members to come to the House and speak on London Bills to make British Rail aware of their problems?

    We shall go on speaking, and we shall go on fighting for our constituents' interests. We shall do it any way that we possibly can.

    8.28 pm

    I am sorry that I was unable to attend the earlier part of the debate, because of matters arising from the Budget. I was, however, very much involved in the Second Reading debate on the Bill.

    I am happy to be able to support the Third Reading of the Bill. The Second Reading debate was very useful, identifying a number of problems—some arising directly from the Bill, and others arising less directly from it. We discovered something to which I hope that British Rail will give more attention: that the works provided for in the Bill, particularly the opening of the tunnel, will not solve the problem of direct access to the Channel tunnel. We still await a definitive statement from British Rail about how direct rail links from the north-east of England to the Channel tunnel will be achieved. That is an important issue for the north-east, and we want answers to it soon.

    The Second Reading debate concentrated the mind wonderfully. It also made British Rail realise that the improvements at King's Cross which the Bill will secure go naturally alongside the use of the newly electrified line in 1991 to restore overnight services from Scotland and the north-east down the east coast main line to King's Cross, from which passengers could then take advantage of the services provided by the Bill. I am glad that British Rail has made a statement showing its desire to do that, subject to the satisfactory conclusion of the study. I am grateful to my hon. Friends and hon. Members in other parties who helped to secure that happy outcome, and I wish the Bill success.

    8.30 pm

    I did not speak on Second Reading, but I was here for the debate and voted to give the Bill a Second Reading because I was impressed with the way in which my hon. Friend the Member for Chipping Barnet (Mr. Chapman) presented his case. To my regret, I failed then to recognise how the powers in the Bill will adversely interfere with my constituents who use trains into King's Cross and then make onward journeys to central or southern London.

    I speak particularly of the period during which the works foreshadowed in the Bill will be under construction. My hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) touched on the powers that are given in clause 11, and I want to deal in some detail with the way in which they will affect my constituents who use King's Cross station.

    Many of my constituents come down to the station on the train from Cleethorpes that arrives at 9.20 am, and I cannot imagine what life will be like during the construction of Work No. 4. In the deposited plan No. 10, it is proposed that in the London borough of Camden there should be a new ticket hall at the concourse level. We have heard this evening, and on Second Reading, that the period during which the works are under construction may be from two to three years. It is likely that revamping a station and reciting a ticket hall could occupy a large amount of the total construction period. I am trying to envisage what life will be like on that concourse when the works are under way.

    I have the fortune—or misfortune—to have to use King's Cross ticket office and concourse now. I use it at rush hour when I go to catch the 18.04 train on Thursday or Friday nights from King's Cross to Cleethorpes, and I have to queue there with many other people. Even without the works, it is a small concourse. Between 17.45 and 18.30 about six or seven InterCity high-speed trains depart from King's Cross to destinations in South Humberside, Yorkshire, Newcastle and Lincolnshire.

    At that time, about 400 or 500 people are queuing for their trains and using the services of the ticket office and concourse. What will life be like for the departing passengers when the new concourse is under construction—not to mention the fact that in the earlier part of the week many passengers arrive at that time on long-distance trains? If no provision is made during the transitional period for some improved access to a temporary ticket and concourse facility, things will be even worse.

    I hope that British Rail and my hon. Friend the Minister will be able to tell us what discussions have taken place in British Rail management about temporary ticket and concourse arrangements. We already know what life is like when temporary work is going on at King's Cross. For example, on Monday of this week I alighted from the train that brings me from Cleethorpes to King's Cross—I had had to change at Newark — at 4.30 in the afternoon. I tried to get to the Victoria line underground by means of the escalator, but could not, for understandable reasons.

    British Rail and London Underground have failed to establish a temporary ticket concourse and queuing area to cope with the emergency. I accept that that was an unplanned-for emergency, so one can forgive British Rail and London Underground for failing to take appropriate action, because the emergency was nothing to do with them, but I was prevented by British Rail and London Underground personnel from gaining access from the King's Cross concourse area to the Victoria line underground station, so I could not catch a Victoria line train.

    Unless British Rail is prepared to guarantee that its understanding of clause 11 will ensure arrangements being made for a temporary ticket office during the construction period, there will be a tremendous passenger traffic jam of people arriving at, and departing from, King's Cross, particularly at rush hour.

    My hon. Friend is quite rightly dealing with the problems of congestion around ticket offices. Does he accept that at one particular part of the day there is heavy congestion — when people queue up to take the 18.04 direct train to Market Rasen and Cleethorpes?

    My hon. Friend is right. He and I experience those problems. I am concerned about the problems for passengers departing on the 18.04 train and other trains at or around that time. At rush hour, people will arrive and possibly purchase tickets in a non-existent ticket hall or, at best, some sort of temporary ticket hall. We do not know what the arrangements for that will be. We do know that there is limited space even without the works envisaged in clause 11. We know that there is tremendous congestion at present. When the two-year period of the works arrives, the congestion will be horrendous.

    British Rail needs to be a little more forthcoming about what it will do to deal with this problem. I have not yet touched on the problem of the purchase of tickets. Often, passengers departing for Lincolnshire, Humberside, Newcastle, Sunderland and Yorkshire have to go to the ticket hall to alter their tickets, especially on Fridays in the summer months, when they are not aware that they cannot use their blue saver ticket and must obtain white saver tickets. There is already tremendous congestion on a Friday — it is worse in the summer — when departing passengers are reminded over the intercom that their blue saver tickets are not valid. There is a mass rush to the ticket area as they seek to upgrade their tickets from blue to white savers.

    I know that, because I use those tickets on various occasions— [Interruption.] Yes, I do. I do not always use the first-class facilities provided for me by the Fees Office. I use blue and white saver tickets, and if the hon. Member for West Bromwich, East (Mr. Snape) doubts that, I have here in my pocket the blue saver ticket that I purchased — through the Fees Office — to travel from Barnaby to King's Cross yesterday. That is my contribution to keeping public expenditure down.

    It is not nonsense, because we are talking about many passengers who do not always recognise when they get to King's Cross on a Friday that they are not allowed to use the blue saver tickets that they have purchased from the railway station of departure perhaps a day or two earlier. They then go to that ticket concourse, causing, even at the moment, the most tremendous congestion, to upgrade their tickets to white saver tickets.

    I think that the hon. Gentleman may be under a misapprehension. Loth as I sometimes am to give the benefit of the doubt to British Rail, it seems to me from a careful study of the plans and this Bill that the existing ticket sale, exchange and provision facilities at King's Cross station will not be affected at all by any of the provisions in the Bill.

    Of course, the hon. Gentleman knows more about his constituency than I do. All I can say is that I fail to understand how it is going to be possible to enact the provisions of clause 11 without some disruption to passengers arriving at and departing from King's Cross. I have had experience of works undertaken by British Rail in my own constituency. It says that there is no problem and that the temporary provisions will ensure that there will be no queueing problems. It says that, while the major works are going on, passengers will be able to purchase their tickets and there will be no failure of service at ticket halls. I simply do not believe the assurances that have been given to the hon. Gentleman, who is not a gullible Member of this House and would, I am sure, have pressed British Rail on that point. I am very surprised that British Rail has been able to give him that assurance.

    One only has to look at the way in which British Rail and London Underground, even some three months after the tragic fire, have been unable to establish proper facilities that do not prevent passengers from using the underground ticket concourse area. As I have explained, yesterday, when I came off the train at King's Cross, I was forbidden by British Rail and London Underground personnel to use the ticketing facilities underground. We have had three months' experience since the fire, during which British Rail has failed to establish any temporary provision. If that experience is anything to go by, we cannot believe what British Rail has told the hon. Gentleman.

    This is something that we must be concerned about. Passengers departing for Lincolnshire and South Humberside have only one train that they can catch. If they are caught up in passenger congestion, they may miss that train. The hon. Gentleman says that there is going to be no problem. I do not accept that. There will be a delay to any passenger departing from King's Cross at 18.04 pm while those works are going on. There is a risk that, when passengers are told over the intercom that they will have to upgrade their tickets, there will be delay. In my opinion, that delay will cause some of them to miss their trains.

    If they miss their trains to Leeds, York or Newcastle, there is no problem; they can catch another train half an hour later. They cannot do that if they wish to travel on the 18.04. If they are caught in massive passenger congestion and miss that train, they have had it until the next day; they will have to wait 24 hours—unless they are prepared to go and cool their heels on Newark station for an hour or two, which people sometimes do.

    I simply do not have confidence that clause 11 gives British Rail the power to maintain and construct a new ticket hall without the most massive disruption of service to the customers of British Rail who live in Lincolnshire and South Humberside, in particular.

    I am listening carefully to my hon. Friend. Would he not concede, however, that for British Rail to make any sort of improvement of necessity means temporary disruption to passengers? Is my hon. Friend not being entirely unreasonable in criticising British Rail in this respect? In complaining that its efforts to improve its service to his constituents mean that for a temporary period there might be a certain amount of disruption or that his constituents might have to make alternative arrangements for a short period to bring about in the longer term a genuine improvement in service, he is surely being somewhat unreasonable.

    No, I will not concede that, because in the long run, as a famous economist once said, we are all dead. I do not accept that a two-year period is temporary. It is a lifetime of eternity, particularly for constituents such as mine, who already see the writing on the wall for the present service. I do not think that the long-term arrangements will be of benefit to my constituents. My experience tells me that, in the case of many road or rail improvements, it is not worth putting up with the temporary disruption because the service at the end is not always improved. I would dearly love British Rail to give me an assurance that, if my constituents are prepared to put up with the temporary arrangements that will arise from clause 11, two years afterwards we shall have better facilities for getting from King's Cross to my constituency. It has not done so.

    My hon. Friend is now making quite a serious allegation against British Rail. I have to ask him whether he has done British Rail the courtesy of asking that question and getting an answer. If he has not, I think he should withdraw what he has said.

    I have, Madam Deputy Speaker. In order to answer my hon. Friend, I am running the risk of going out of order. I have asked British Rail whether it can guarantee that there will be a high-speed 125 service from King's Cross to—

    Order. That is totally out of order. Will the hon. Gentleman now come to the clause in the Bill to which he was referring?

    I feared that you would say that, Madam Deputy Speaker, and I regret that I gave way to my hon. Friend, because you are absolutely right. The point is that disruption is going to be caused to departing passengers.

    Clause 14 gives British Rail the power to divert traffic and to stop up footpaths and roads because it is undertaking works. Under clause 14(4), the board is going to give 28 days' notice of its intention to stop up a road or a footpath to the traffic commissioner and the operator over the road as defined in the Transport Act 1985. It is not prepared—I am surprised that the hon. Member for Islington, South and Finsbury (Mr. Smith) did not pick up this point—to give notice, as it is prepared to do under clause 26 when it comes to protecting the highway authorities, to the London borough of Camden.

    Clause 26 specifically says that British Rail is prepared to give the mayor and burgesses of the London borough of Camden some 28 days' notice of any intention to stop up a highway, yet it does not seek the power in clause 14 to give any such notice to the local authority. That is something which the hon. Member for Islington, South and Finsbury should certainly be very concerned about. It is prepared to give a protective provision to the local authority of Camden when it comes to any public highway — for example, the A501 and the A41 — yet it is not prepared to give the same protective provision when it comes to general works. Surely that is something that we ought to be concerned about.

    Stopping up roads causes great inconvenience to local residents. I do not live in that part of London, but I come into it on the train. Over the last half mile into King's Cross, one is immediately aware of the congestion in that part of London, the number of private dwellings, and how many of them are older properties. If British Rail stops up roads without giving any notice to local authorities, and if it insists on those powers, it could be taking a slightly cavalier attitude.

    In one clause, BR seeks powers that the local authority should be given notice, yet clause 14 does not seek powers to give that notice. That is very unfair, because if a road or a footpath is closed and no provision is made except for those who are going directly to their places of abode, quite severe inconvenience can be caused to a large number of residents.

    There must be thousands of people who live in the area of King's Cross. When I come into King's Cross on the train, I am aware of the large number of properties. It is likely that a large number of people will not realise the inconvenience to which they will be put. After all, private Bills are often enacted without individual constituents knowing exactly what will happen.

    I should not like to be the hon. Member for Islington, South and Finsbury or a councillor for any of the wards that are to be affected under clause 14(4). When many constituents find out that they cannot go about their normal daily business, they will start to shower their councils with complaints. If they are delivery men, they may not have access by many of their usual routes. I can see a large number of councillors and the hon. Member for Islington, South and Finsbury being inundated with many complaints from constituents when they are told what is to happen.

    It is the responsibility of British Rail to be a little more forthcoming about the way in which people are to be affected. I speak with some feeling on the matter, because I have served on a large number of private Bills promoted by British Rail and by the London Docklands development corporation. I have seen how petitioners who have been alive to what the promoters have suggested have not taken on board what is to happen. Only under cross-examination have they become aware of some of the detrimental effects of private Bills.

    Ordinary constituents are often not aware of the existence of such Bills, and do not petition against them. This Bill was not petitioned against—or if it was, the petitioners have been sorted out and discussions have taken place. In any case, the Bill went through the private Bill procedure unopposed.

    I can guarantee that individual constituents of the hon. Gentleman and individual electors will press their councils and ask, "How is it that suddenly I am inconvenienced and cannot go about my normal business and do not have access to roads where I have made deliveries for a number of years?" They will be told, "It was private business. You had the opportunity to petition against the Bill, but you did not do so. You lost the opportunity, and now you will have to put up with all the inconvenience."

    We should not expect ordinary citizens to rely solely upon the House of Commons to make sure that all is well when it comes to their rights. British Rail has a duty to advertise more widely before it seeks such legislation and to make clear exactly how inconvenience will be caused by such private legislation.

    My hon. Friend will see that

    "the board may purchase compulsorily and use such of the land delineated on the deposited plans."
    Is my hon. Friend convinced that all those who are potentially affected, whose land is covered by those plans, have already been informed?

    If my hon. Friend will allow me, I shall come to the question of compulsory purchase in a moment, as that issue gives rise to concern in its own right.

    I wish to address myself to the way in which British Rail uses powers that it has been given in private legislation to bamboozle the general public. It can say, "We have these powers. They were presented to Parliament and debated in Parliament, and people have to put up with those powers. We are giving you 28 days' notice. We do not have to advise local councils in the case of general works provisions, and we are doing everything legally." Of course it is doing everything legally. If the Bill is passed tonight, as it might well be, British Rail will have the right to defend itself and acquit itself of any need to consult the local populace. However, the local populace have some rights which transcend the enactment of private legislation.

    British Rail should have given an undertaking that it would ensure that a leaflet would be sent to every resident in the area affected by clause 14(4) and that it would provide a leaflet, with more than 28 days' notice, detailing the way in which it will use its powers to construct the necessary work.

    I have had experience of a highway authority exercising powers that have been legislated for in this House. In 1981, I took a great interest in the private Bill promoted by Humberside county council, which was given powers by this House. It used the minimum legal powers to use stop-up works orders. The local population were told simply, "We are exercising powers given to us under private legislation. We do not have to give you any notice, and even if we did, it would be only 28 days. There is nothing that you can do about it." That is wrong.

    Ordinary people seeking access and egress to and from their homes, going about their business and going to and from work in the rush hour in heavily congested areas of London with a high concentration of people moving about during the rush hour should have the right to more than 28 days' notice. If it is to be only 28 days' notice, it should be given specifically to each householder. There is nothing worse than a householder, a tenant or a landlord being confronted with "access only" signs to the street that he normally uses when he might have made arrangements for tradesmen, and when tradesmen cannot seek access—

    Order. The hon. Gentleman has been tedious in his repetition. Will he now move on to another clause in the Bill?

    Order. The hon. Gentleman has made a number of suggestions about clause 14, which we have heard very carefully. He is being very tedious. I am absolutely serious in suggesting that he should move on to another clause.

    I shall now move on to clause 26, under which the highway authorities and the local councils are to be given notice that the A501 and the A41 trunk roads may be affected by works which are to take place. The clause says that it is for the protection of the highway authorities. I am not sure that, it will be for the protection of the highway authorities. What will happen is that the A41 trunk road, a major road into London, carrying traffic from the A1—

    —and from Lincolnshire, will be affected by the works that will take place.

    I should like to know what kind of assessment British Rail has given or is likely to give to the London boroughs of Camden and Islington of the transitional arrangements that will be made for the works taking place there.

    Perhaps it will be helpful if I tell my hon. Friend that the London boroughs of Camden and Islington were of course consulted on all aspects of the provisions of the Bill and fully consent to what is in it.

    I am grateful to my hon. Friend, but it is interesting that British Rail seeks to give notice only to Camden and Islington when it intends to carry out works that affect the A501 or the A41 but will not give that notice, except for the general 28 days to which I referred, when it comes to clause 14(4). So I am very unhappy about clause 26 and the fact that there is likely to be severe traffic congestion.

    I do not know what assessment has been made of the likely effect of traffic congestion. My hon. Friend says that the boroughs of Islington and Camden have been fully consulted and that they are, I assume—I am prepared to accept his assurance — happy with the likely consequences of any traffic congestion that may arise. I can only suggest to my hon. Friend, with regard to those of my constituents who are worried about the pedestrian congestion arising out of the works under clause 11, that those who might otherwise have used British Rail to come into King's Cross may, during the enactment of the provisions of the Bill, decide instead to use their cars. They will come in on the A1 and use the A41 into London.

    I am not sure that my hon. Friend will be able to give the same assurance that he has just given, that the London boroughs were consulted, when it comes to those who do not live there but who will be affected by the traffic congestion that is bound to arise on the A41. It does not take much for traffic congestion to arise on the A41 now, and there will clearly be more, because powers will be sought to protect the highway authority.

    I do not think, therefore, that my hon. Friend can give an assurance that will cover all the people who will be adversely affected by the provisions of clause 26 when it comes to the certain congestion that will arise on the A41.

    If I may say so, my hon. Friend is on to an important issue here. He is touching on whether the traffic implications of the works which are envisaged will spread beyond the authorities mentioned in the Bill. It would help the House if he could suggest to us which other authorities might be affected and perhaps suggest in what way the Bill is defective—because this could be a serious defect in the Bill and one which may affect the constituents of many hon. Members other than those already mentioned. Does my hon. Friend not agree that, in that case, the Bill is seriously defective?

    The point that my hon. Friend has just made is that the Bill gives the local authorities in which is situated the A41 trunk road the right to be consulted in the event of highway work. That is perfectly reasonable. What my hon. Friend draws attention to is the fact that large numbers of people make their journeys from all parts of the United Kingdom, certainly from eastern England and a large number of counties elsewhere. They come into London on the A41 trunk road. One cannot get into London without using it. I know, because occasionally I use it myself. What British Rail has failed to do is make any provision in the Bill for other local authorities or people who live in other local authority areas and who use the A41 to be given notice that there is likely to be traffic congestion.

    A large number of people in Lincolnshire and South Humberside might decide to come to London by road. They will not know, when they set out on their journey, that when they get to the other end there is likely to be trouble on the A41. How can they be helped to know? It will be said that 28 days' notice will have been given to the London borough of Camden and 28 days' notice will have been given under clause 26(1) to the London borough of Islington. These boroughs know that there will be problems, but I will not know, and nor will my constituents. The constituents of my hon. Friend the Member for Gainsborough and Horncastle will not know.

    If, of course, the through service to King's Cross from Cleethorpes and Market Rasen is done away with, there may be many more people on the A41 and they will suffer double inconvenience because of British Rail.

    I have a horrible suspicion that my hon. Friend is tempting me to stray out of order, but one of the things that I try to do when I am speaking in the House is to keep within the rules of order.

    Of course, if fewer passengers come into King's Cross station, there are likely to be more people using their motor cars to come into London. We all wish to discourage that practice. If commuters come to London by car, they have to pass along the road for which British Rail seeks the power in the Bill. The use of that power will disrupt the highway. That can only mean traffic jams and congestion in the boroughs of Camden and Islington. It is highly likely that traffic congestion will be caused throughout central London.

    I recall that, just before Christmas, a water main burst at Swiss Cottage. That isolated event caused the roads of central London to seize up. The point is that, if traffic congestion is likely to result from works undertaken by British Rail that disrupt traffic on the A41 trunk road in Islington and Camden, there are inevitable consequences for traffic flow in central London as a whole. We cannot escape that. It does not matter where the traffic comes from, whether from the constituency of my hon. Friend the Member for Darlington (Mr. Fallon) or anywhere else.

    I must press my hon. Friend to answer me. I think he has edged towards the point, although he has not conceded it yet. Is he suggesting that the Bill is defective because it does not refer explicitly to other local authorities that might be affected, directly or indirectly, by the sort of traffic problems that my hon. Friend describes?

    I hope that my hon. Friend agrees with me that the Bill is defective in this way. Indeed, I believe that the House should have serious reservations about the Bill generally, and the fact that other local authorities that might be affected are not mentioned in the Bill. Will my hon. Friend concede that point?

    Yes, I concede that point. Equally, I accept that it would be unreasonable for British Rail to be forced to give legislative notice, in relation to a Bill of this sort, that there is likely to be traffic congestion on, say, the A41 trunk road. It would be unreasonable to expect British Rail to advise all local authorities whose residents travel by road to the A41 that road works are likely to be undertaken there. It would be unreasonable for British Rail to give legislative notice to, say, the borough of Cleethorpes, or West Lindsey, or East Lindsey. However, I believe that British Rail should ensure that notice is given in some way, as it is by the Department of Transport when major road works are expected on motorways. In that case, notices are displayed clearly in national newspapers saying that there will be road works in a certain part of the United Kingdom, or in London.

    Only the other day, notices were put in The Times by my right hon. Friend's Department. As a result of such notices, sensible people will read about road works and likely congestion on the M1, M6, or M25. They will make decisions about journeys accordingly. Such notice is given without resort to legislation.

    The Bill does not require British Rail to do the same thing. My hon. Friend the Member for Mid-Worcestershire (Mr. Forth) suggests that the Bill might be defective and should contain a power to notify the public. That is unreasonable. However, British Rail should be required to give some indication of works to be undertaken in a hub of central London—whether it is a hub for motorists or railway travellers. For example, it might say that there is likely to be traffic congestion on the A41 or severe congestion because of construction of the new ticket hall at King's Cross station, which is referred to in clause 11.

    The Bill should ensure that British Rail takes the general public into its confidence. I am not referring just to, say, the constituents of the hon. Member for Islington, South and Finsbury. British Rail should not simply give 28 days' notice to the mayor, burgesses and corporation of the borough of Camden. Surely there should be a requirement to give notice to the travelling public of the United Kingdom.

    My hon. Friend mentioned the difficulty caused by a burst sewer on the A41, which is used by his constituents and mine. Clause 15(1) gives very wide powers to the British Railways Board to discharge water from any works carried out. That may also cause problems, and perhaps my hon. Friend will deal with that matter.

    I will deal with that point in time. I am dealing with the need for British Rail to give notice to the wider travelling public, which does not stop at the boundaries of the two London boroughs mentioned in the Bill. The travelling public are those people who use trains running into King's Cross, not just those people who travel in London. Some people think that the only people who should he consulted about transport in London are London constituents, London Members and London authorities. That is not the case.

    Apart from my hon. Friend the Member for Chipping Barnet, who is steering the Bill on behalf of British Rail, almost all hon. Members who have spoken in the debate represent constituencies outside London. I resent the charge from the Opposition Front Bench and some other hon. Members that only London Members have the right to be concerned about the Bill. What happens at the King's Cross railway station affects hon. Members from the north-east, the east and Lincolnshire, and affects all constituents who drive into London on the A41.

    British Rail must ensure that the travelling public are made aware, with more than 28 days' notice, of temporary construction work. The powers given to British Rail in clause 26 are not sufficient to protect the interests of the wider travelling public, so British Rail has a duty to be less than cavalier in giving notice about undertaking works.

    British Rail has a bad habit of undertaking work without giving notice. Recently a Minister was in my constituency and wanted to travel back to London on a Sunday. British Rail failed to give more than 24 hours' notice of a major works, for which it must have made provision long before it decided to embark on it. No notice of the work was given, and my hon. Friend the Minister found that he could not catch a train to London. With that experience, I am sceptical of British Rail's power under clause 26 to give adequate notice to the travelling public.

    My hon. Friend the Member for Chipping Barnet and the hon. Member for Islington, South and Finsbury may have received assurances that satisfied their constituents, but I have not received assurances that satisfy my constituents. The many people who travel on public transport in and around London, particularly on Fridays and at weekends, are not confined to people who live in London. Many people are affected by works at King's Cross or on the A41, and they have reason to be concerned about British Rail's cavalier attitude.

    I am not confident that British Rail will give adequate notice of the work. Why should the period of notice be 28 days, when four weeks' notice is given to local authorities? Most local authorities have cyclical council meetings to consider matters such as this, so that they can make objections if they wish.

    I know why British Rail has selected 28 days. It is obvious. It knows that the average local authority will not sit between one meeting of the transportation committee and the next. It will tell the London borough of Islington, "We're exercising our powers as laid down in section 26 of the Act. We're going to do this work and we're giving you the required 28 days' notice." The local authority will not necessarily have the chance to comment on British Rail's intention. 'The local authority will work on a cycle of 35 to 45 days. It will receive notice of British Rail's intention, saying, "We're going to undertake the works which the Act has empowered us to do, and we are giving you 28 days' notice."

    My hon. Friend is dealing with an important point, and I hope that he will expand on it. Does he accept that two different sorts of works may be involved? One sort of works could be long foreseen and may be part of a major new project which must be planned months, if not years, ahead. However, there may be other works which could come up at short notice. Has my hon. Friend made any distinction between those two sorts of works? Does he think that the Bill deals adequately with both kinds of works?

    I should like to comment on the point raised by my hon. Friend, but you, Mr. Speaker, would call me to order. I can comment only on the specified works in the Bill. In fairness to British Rail, it is reasonable to assume that it will have set out in deposited plans what the specified works will be. If I were to speculate idly on my hon. Friend's comments, I would be outside the terms of the debate.

    British Rail is seeking powers to give notice to the London boroughs of Camden and Islington about when it intends to undertake specified works. Specified works, which will be detailed in the deposited plans, will need to have been drafted, planned and trailed for a long time in advance. The Bill is not concerned with matters that might suddenly arise during construction. In all fairness, British Rail could not anticipate those and is not seeking powers in respect of such matters. We are concerned about specified works and about the intention in the Bill to provide a new highway.

    Twenty-eight days' notice is unreasonable, because British Rail knows well in advance what those plans will be. It could tell the House now what those plans are. We know what British Rail's intention will be. However, at a time of British Rail's choice, within the two years' estimate of construction, British Rail can suddenly say, "Now we're going to exercise the powers to undertake the specified works in the Bill. Now we're going to bounce Islington council and Camden council. Now we're going to bounce the hon. Member for Islington, South and Finsbury. Now we're going to give them all 28 days' notice. We've kept this lot up our sleeve for a year or 18 months."

    I do not know the London borough council scene as well as I know county council structures. In a county council, we have a transport policies and planning committee. I assume that, since the demise of the GLC, London boroughs must have an equivalent committee that would consider anything of this sort from British Rail. That is why 28 days is unreasonable. I would have thought that at least 56 days or even three months would be a much more reasonable period of time for giving notice.

    I am not suggesting that no work should be undertaken by British Rail simply because there is a risk of disrupting someone at some time. I accept that it has the right arid the duty to improve its services in such a way as will lead to the long-term future benefit of passengers. However, I do not believe that within 28 days it is possible for local residents to put their affairs in order without disruption. In my view, we have to give serious consideration to clause 26. We cannot amend it now, and that is one reason why I am not happy about the Bill.

    My hon. Friend the Member for Gainsborough and Horncastle tempted me to talk about sewers and watercourses. That is not my speciality, and I shall rest my case on that basis.

    9.21 pm

    With the leave of the House, I shall seek to reply to the points that have been raised by 11 hon. Members in a wide-ranging debate. I must confess that there are 14 significant and separate points with which to deal, some of which I did not anticipate. The hon. Member for West Bromwich, East (Mr. Snape) warned me that, whatever my answer to one of the points, he would not be satisfied. I shall do my best. I am immensely grateful to the hon. Members who have raised points, many of which have been raised by more than one hon. Member. I shall deal with them in the order in which they were raised.

    When I referred to the fact that between the Second and Third Readings of the Bill planning permission had been granted by the Corporation of London, I was referring to the redevelopment proposals in the area of Holborn Viaduct station. It is the realisation of that redevelopment scheme that will pay for the Work No. 1 part of the Bill. I shall come to the exact amount involved in a minute.

    I should like to confirm that the London boroughs of Camden and Islington, wherein some of the works are taking place, were fully consulted and expressed themselves content with the arrangements. It may be helpful for the House to know that the London Regional Passengers Committee and the Transport Users Consultative Committee have been consulted about all the provisions of the Bill and have said that they are content. The unions have also been consulted. I hope that that deals with that point.

    The next significant point raised was the time for completing the project. Hon. Members who were present on Second Reading will recall that I did not have an opportunity to reply to many of the points that had been raised. I should like to confirm that it is expected that the Holborn Viaduct area works could take about two and a half years, and that the works at King's Cross could take up to two years. Again, I shall come to the detail of that shortly.

    The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) asked whether there would be any circumstances whereby British Rail would have to come back to change the provisions of the Bill. The answer is that neither British Rail nor I can anticipate any circumstances in which that might happen. However, there is one minor qualification, and I shall deal with that when I seek to deal with the point about the latest redevelopment proposals at King's Cross. This was raised by the hon. Member for Islington, South and Finsbury (Mr. Smith) and by one or two others.

    Another significant point is that some hon. Members want justification for the £100 million estimate that I gave the House for, in effect, rebuilding the tunnels so that InterCity trains can use the new Thames link, and especially the two presently disused tunnels north of King's Cross. The cost of modifying the existing tunnels to take InterCity trains was investigated most carefully and a detailed study was made by civil engineers at the instigation of British Rail. That is where British Rail got that figure from, although perhaps it should be added to a little to allow for inflation. However, the figure was carefully worked out. At the same time, detailed studies of cross-London train demand were made. The inescapable conclusion of British Rail was that the significant extra work and extra cost involved could not be justified on a financial cost-analysis basis.

    There was also the question whether any petitions remain outstanding. Originally, when the Bill was introduced in the House of Lords, there were 17 petitioners. Sixteen of those 17 were completely satisfied before the Bill was examined in Committee in the other place. When the Bill came to this House, there was one outstanding petition, plus three others. All those four have now been completely satisfied and that is why the Bill was examined upstairs in this House by the Unopposed Bills Committee.

    A major and significant point that has been raised is the possible redevelopment of King's Cross station. The point was made eloquently by the hon. Member for Islington, South and Finsbury. This is an ambitious project and will involve a larger lower-level station capable of accommodating InterCity and possibly even international trains. As I understand it, the proposal relates to the redevelopment of derelict and unused land in the ownership of British Rail and other agencies, and could remedy the present inadequacies at King's Cross and St. Pancras main line stations.

    I am grateful to the hon. Gentleman who, as always in these matters, is dealing generously and fully with all the points that have been raised. However, if a new international terminus is to be created at underground level at King's Cross, as I understand it from the layout of tunnels and existing Tube tracks in the area — we must remember that five Tube lines converge on the King's Cross area, so the underground topography is complex—only one location could be used for such an international terminus, and that is not under existing derelict land; it is under existing used buildings.

    I note what the hon. Gentleman says, and I shall try to satisfy him. This project is at the very earliest stages and, as he knows, the ideas of two groups of developers have been presented for public consultation. As I understand it, that is the position at the moment. If powers are required for railway works associated with that development—if that development comes to fruition—clearly British Rail will have to deposit a Bill for parliamentary consideration. A low-level station capable of accommodating InterCity trains is not part of a fully developed plan. As I understand it, it is only a possibility at the moment and, in that sense, it is not even an idea. Where the links would go, what services would use that station and whether it could be financially justified are questions that cannot yet be answered. Indeed, they may not be answered for several years.

    If the terminus development went ahead, Works Nos. 3A and 3B could be affected. I do not seek to hide that fact in any way. I ask the House to consider the fact—I am satisfied about this—that the reinstatement of the tracks and electrification of the lines in the two short, disused tunnels forming Works Nos. 3A and 3B are relatively cheap to provide and are short-term proposals. They provide the basic, needed link to plug in the suburban services from the east coast main line, St. Albans and so on, through the Thames link to the south.

    If we knew at this stage that the more ambitious proposals regarding the new underground terminus were to go ahead — given that British Rail is satisfied that Works Nos. 3A and 3B can be justified on a cost basis — those developments may not prove to be worthy of investment. Nevertheless, it is still worth undertaking Works Nos. 3A and 3B. That is the best way in which I can deal with the matter raised by the hon. Member for Islington, South and Finsbury.

    My hon. Friend the Member for Darlington, (Mr. Fallon) rather unfairly suggested that this was a yuppies' Bill. My hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) has said that there is a need to prove that the Bill will be of benefit to people other than Londoners. That is precisely the argument that I made in my contributions today and on Second Reading. The Bill will be of convenience to Londoners, but it will also be of convenience to many other people outside London. As a London Member, I do not regard the word "yuppie" as a description of a Londoner. I do not believe that this good, beneficial Bill can be described in such derogatory terms—if "yuppies' Bill" is a derogatory term. When I leave the Chamber I shall look up that word in my copy of "The Concise Oxford Dictionary".

    The hon. Member for West Bromwich, East has great experience and knowledge of BR matters. He mentioned the access points for the new St. Paul's station. The accesses to and egresses from that station, replacing the old Holborn Viaduct station, will represent an improvement. There will be entrances on Holborn Viaduct, Ludgate hill — Pilgrim's court to be precise — and Farringdon road. Incidentally, the new station will have a taxi rank—the old station did not—and will be fully accessible to disabled passengers.

    The hon. Gentleman also raised—quite fairly—the question of facilities for cyclists. I know that BR will seriously consider the arguments that he has drawn to the attention of the House. My initial reaction is that this is not only a matter for BR, but is also for the local authorities. They should work in concert with BR.

    I note that the hon. Member for Islington, South and Finsbury put down four markers of a wider context regarding the future possible, more ambitious redevelopment proposals for King's Cross. I am sure that B R will note those points.

    I am grateful to the Front Benches for their support for the Bill. I hope that I might, at least partially, reassure my hon. Friend the Member for Harborough (Sir J. Farr). He kindly allowed me to intervene during his contribution, and in addition to what I said then he should know that the escalators will not be constructed before the Fennell inquiry has reported. He is right to say that the Fennell inquiry is not confined to escalators, but, in fairness, I hope he will consider that this could affect every other station, not just this new one. The works at King's Cross, and, indeed, the new St. Paul's station, should not be inhibited while waiting for the Fennell inquiry report. The new escalators will be additional escalators, so they can perfectly honestly be described as an additional emergency exit. That can only be good news. The sooner those escalators can be constructed and provided, the better and safer for people using the station.

    My hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) could not remember my constituency. I was tempted to refer to him as my hon. Friend the Member for Gainsborough and Hardcastle, but I shall resist that temptation. In addition, Chipping Barnet does not nestle in the Cotswolds, but sits in north London.

    My hon. Friends the Members for Gainsborough and Hordcastle and for Brigg and Cleethorpes mentioned the amount of British Rail investment in London as represented by the Bill. Works No. 1, which represents about 95 per cent. of the total cost of the provisions in the Bill, is being made possible by the redevelopment of the old Holborn Viaduct station. As I said on Second Reading, the asset cannot be realised until the new station is built, and vice versa, because Holborn Viaduct is at the end of a short spur that will become obsolete. It is impossible to transfer that £46·5 million — the latest figure, which I gave earlier—to any other British Rail project outside London or elsewhere inside London, simply because it cannot be realised unless the station is closed and the new St. Paul's station is provided.

    This is a serious and important point, so my hon. Friend will forgive my asking whether he appreciates that I am constantly told by British Rail that stations in my constituency are falling into dereliction because it does not have the money to refurbish them, yet we are discussing this kind of investment in London. That is what is worrying.

    My hon. Friend should carry back to the burghers of Gainsborough and Horncastle the good news that this development cannot be provided unless Holborn Viaduct station is closed. Therefore, if the Bill is not proceeded with, that £46·5 million estimate cannot be realised for any project. That puts the matter in its context.

    My hon. Friend inadvertently said that the provisions of the Bill came to £100 million. That is not so. The provisions of the Bill, according to the latest estimate, come to just under £53 million, and 95 per cent. of that is on realising an asset.

    I hope my hon. Friend will appreciate that my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) and I could, had we wanted, have sought to talk out the Bill. We purposely did not do so.

    I am most grateful indeed. I can only assume that support for the Bill now becomes near unanimous.

    Just to confirm why it is so unanimous, will the hon. Gentleman acknowledge that an important part of the package has been British Rail's clear undertaking that one of the facilities that will be provided in the refurbishment scheme will be a platform for sleeper services right up the east coast after electrification has been completed?

    I am glad to hear that news transmitted to the House by the hon. Gentleman. However, that matter is completely without the Bill, so I shall be careful not to be drawn into it.

    My hon. Friends the Members for Gainsborough and Horncastle and for Brigg and Cleethorpes asked about clauses 14, 15 and 26. I can only say that clauses 14 and 15 are general works provisions and are entirely normal. As far as I can see, British Rail is not trying to put in other conditions that may be more restrictive to the public.

    In relation to clause 26, I repeat that the local borough councils were consulted and that they consented. I ask my hon. Friend the Member for Brigg and Cleethorpes to keep a sense of proportion. He rightly said that if British Rail was required to consult other boroughs whose citizens might be inconvenienced if the roads were temporarily blocked, where does one stop? If my borough council, whose territory is close to the A41, was consulted, I could claim that British Rail may have consulted my borough council, but that it did not consult me. Thanks to the media co-operating and giving public information, more and more motorists can be made aware of where traffic works are being undertaken. I am confident that British Rail will co-operate with the media to deal with that problem.

    My hon. Friend the Member for Brigg and Cleethorpes talked about the inconvenience that would perhaps be caused to some of his constituents and to many other people when the works were taking place at King's Cross. I have two points to make about that. First, British Rail is determined that if there is any inconvenience it will be kept to a minimum. It is interesting to note that these works will generally be at the eastern corner of the present concourse and will not be right in the middle. That will be partially helpful. Secondly, when the works are completed they will be of benefit to my hon. Friend's constituents and to many other people, not only because there will be additional access and egress, but because the whole system will work more smoothly.

    In his usual charming and very helpful way my hon. Friend has successfully sought to reassure me. I accept that there will be long-term benefits, which is the point he is trying to make, with some degree of success. The only thing that I should like to put on record is that I sincerely hope that when these works are completed there will still be a train from King's Cross to Cleethorpes.

    I am sure that the British Rail authorities will pay attention to what my hon. Friend has said.

    I do not think that these works will deleteriously affect the passenger concourse. I know that British Rail is anxious to see that any inconvenience that there may be is kept to a minimum.

    I apologise to the House for taking so long to deal with 14 significant points raised by 11 hon. Members. I am delighted at the widespread support for the Bill and to see that the fears of some hon. Members have been allayed between the Second and Third Readings. The Bill started its journey exactly a year ago in the other place. It deals with work that is badly needed in this part of our great metropolitan city. It will bring benefits, in some cases substantial benefits, to many people, not just to Londoners. I commend the Bill to the House.

    Question put and agreed to.

    Bill read the Third time and passed, without amendment.

    British Railways (No 2) Bill (By Order)

    Order for Second Reading read.

    9.43 pm

    I beg to move, That the Bill be now read a Second time.

    The Bill is the 25th in a long series of general purpose Bills introduced by the British Railways Board since its reconstitution under the Transport Act 1962. As on previous occasions, it will provide the House with an opportunity to discuss some of the many matters affecting our railway system. It also gives an opportunity to me and to others to draw attention to the real improvements that are being made to the service throughout England, Scotland and Wales.

    Those who live in my lovely part of the world—the south-west — may be provided with an important improvement to which we shall all thoroughly look forward. Brand-new 100 mph trains, with extra seats for commuters and faster journey times, are all contained in a package of improvements being introduced on the Bournemouth main line. The recently completed electrification of the line between Bournemouth and Weymouth and the introduction of the Wessex electrics have provided a springboard to launch the new schedules.

    The network manager for South Western services said:
    "There is something for everybody travelling on the main line between Waterloo, Southampton, Bournemouth and Weymouth. Apart from the all-electric service and new trains, the timetable has been reconstructed to meet changing customer needs."
    Indeed, the new trains will provide more seats from May, and, when the whole fleet is running, there will be 8,329 seats in the peak periods—8,772 on Fridays—compared with the current total of 6,227. Services will be very much improved for my constituents.

    There will be a 5.15 am departure from Poole serving the principal stations, including Bournemouth, Southampton and Winchester, and arriving at Waterloo at 7.20 am. That will be especially useful for passengers wishing to catch early InterCity departures from King's Cross and Euston, in which many hon. Members have expressed interest.

    A number of hon. Members on both sides of the House have expressed concern about some of the Bill's many provisions, and, indeed, about some of the matters outside its narrow scope. It may be convenient for the House if I describe the board's response to some of the concerns that have been expressed.

    The hon. Members for Berwick-upon-Tweed (Mr. Beith) and for Roxburgh and Berwickshire (Mr. Kirkwood) earlier mentioned east-coast sleeper services. The announcement in the south-west relates to May of this year. That date is likely to be significant in this respect as well. InterCity is making major changes in May to the Anglo-Scottish sleeper service, to reduce costs and provide a more attractive service for the important Scottish market. Fewer, longer trains will be run, and all will operate from Euston via the west coast line, where they can be electrically hauled for most of their journey. The longer sleeper trains will have fewer intermediate stops to avoid disturbing passengers' sleep, and will be limited to 80 mph. They will include a lounge car, open all night, and breakfast in the morning. This strategy involves the withdrawal of the London-Newcastle sleeper away from Alnmouth and Berwick.

    Newcastle is now only two hours and 50 minutes from London by the fastest train, with the first south-bound train arriving in London before 9 am, and the last train back at 10 pm. Demand for the sleepers has fallen, and is now below 20 a night south-bound and 10 north-bound. Berwick is used by an average of only two passengers a night, and Alnmouth by only one a week.

    My hon. Friends the Members for Harborough (Sir J. Farr) and for Rutland and Melton (Mr. Latham), together with the hon. and learned Member for Leicester, West (Mr. Janner), have also expressed concern to the board about main line midland electrification. The board's position is that there has been increasing pressure recently to electrify the line from St. Pancras to Leicester and Sheffield. At present, the route is electrified as far as Bedford, and Network SouthEast has modest plans to extend to Kettering and Corby, in connection with a proposed theme park called Wonderworld at Corby. However, the financial case for electrifying the whole line is poor. The service is now entirely operated by InterCity 125 trains, whose journey times are almost as good as could be offered by electric services. A £25 million electrification scheme has just been completed covering the Bedford-Leicester-Loughborough area, and the new timetable from 16 May will offer InterCity trains between London and Leicester every half hour.

    My hon. Friend said that the cost of the scheme was £25 million. That places the House in the quandary that I attempted to articulate on Second Reading of the previous Bill some weeks ago. These Bills have no financial memoranda attached to them. At some stage when a Bill is deposited, some estimate is laid in the Private Bill Office, but such an estimate is not attached to the Bill. We cannot, therefore, compare the estimated cost for these works with those of other works, and we cannot judge the whole. I know that there is a Joint Committee on Private Bill Procedure, but could some memorandum containing the estimated costs of the work be attached to the Bill so that we can all see—

    I understand what my hon. Friend has said. He referred to the Joint Select Committee, of which I happen to have the honour to be Chairman.

    Whenever general purpose Bills are debated, it has been the practice to discuss the problems of the rail networks in general to allay concerns expressed by hon. Members who are not directly affected by the Bill's contents, but whose constituents are affected by the rail system in general.

    My hon. Friend mentioned several hon. Members who are concerned that the line from St. Pancras should be electrified as far as Leicester, but that concern extends west of Leicester. My constituents are just as concerned as those of the hon. Members whom my hon. Friend has mentioned. It is a serious problem, and my hon. Friend the Member for Harborough (Sir J. Farr) shares my concern about it.

    I take note of what my hon. Friend has said, and the board will also have noted his concern. I am responding to the anxieties of hon. Members about general issues. The figures that I have given were provided by the board, but we have not yet begun to discuss the Bill's provisions.

    I apologise for interrupting my hon. Friend in the middle of his interesting speech. I have just heard for the first time the figure of £25 million that he gave. Would it be possible before the debate is resumed at another time—assuming that it is — for the exact break-down of the cost to be made available in the form of documentation placed before the House so that we can consider it?

    I am grateful to my hon. Friend. His request will no doubt be recorded in the Official Report and hon. Members will be able to study it at their leisure.

    Electrification, I am assured by the board, will be reviewed periodically in the light of changing fuel costs or the need to renew the rolling stock, should that be necessary.

    I should like, in this general introduction, to deal with the concerns of my hon. Friends the Members for Gainsborough and Horncastle (Mr. Leigh) and for Brigg and Cleethorpes (Mr. Brown), who expressed concern, although unsuccessfully, about Market Rasen station. Just to make it clear, to reduce operating costs of the local services from Lincoln to Grimsby and Cleethorpes, the hoard plans to transfer ticket issuing and checking from the station to the train at most stations on the route. An early-turn clerk will remain at Market Rasen to deal with bookings for the busy morning trains, including those to London.

    My hon. Friends have had a meeting with the board on this matter and, as a result, will know that a decision has been made not to sell the station building until there have been discussions with the local authority, and to make it clear that a member of staff will he present if trains are delayed, so that the lights are on and passengers are not locked in.

    My hon. Friend the Member for Rutland and Melton has made it clear that he is concerned about safety on level crossings, on one of which, sadly, there was an accident in which a young constituent of his was tragically killed. He has now also had a meeting with the board and assurances have been given to him.

    This Bill is divided into a number of parts. Part I deals with standard procedures with which the House is familiar. Clause 3 deals with the incorporation of general enactments and clause 4 deals with the application of part I of the Compulsory Purchase Act 1965.

    Part II of the Bill deals with a series of works. Work No. 1 is the spur road at Battersea. It requires the provision not only of a spur line but of a station, so that there can be dedicated services to and from Victoria. This is to enable visitors to attend the new leisure complex, which, as hon. Members will know, is coming in the place of the old power station, in the same building.

    I wonder whether, in view of my earlier comments, my hon. Friend can give us some estimate of the cost of Work No. 1. I understand from clause 36 that the various costs of this Act will be defrayed from the board's general expenses. But he has referred to Work No. 1 and I wonder whether he has any estimate to offer us on behalf of the promoters as to the cost of undertaking that work.

    My hon. Friend will know that the board has had new financial targets set for it, so all these works are against the background of a system which can provide money for the board in return for the works which are being done.

    Works Nos. 2 and 2A refer to a railway and cut at Kilnhurst, and this is to build a new chord railway which will link the Sheffield and Swinton line with the great central line between Rotherham and Mexborough. Members may be interested to know that originally it was hoped that it might be possible that the intended Swinton curve, which was in the 1984 Act, which I also sponsored in the House, could be used. However, a possible new role has been identified for that curve, involving the establishment of a new station at Swinton on the midland route and served by Sheffield.

    9.59 pm

    The Bill is important and interesting and contains a wide range of provisions. One of the most important elements of the provisions is that there is a cross-London link from the northern routes through King's Cross to the southern half of the country. That is very important because—

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